Is Airbnb Really Worth $10 Billion?

Airbnb is on the verge of securing hundreds of millions in new funding at what The Wall Street Journal is reporting at a $10 billion valuation. Is that really fair when larger rival HomeAway (NASDAQ: AWAY  ) still trades for less than $4 billion in market value? Fool contributor Tim Beyers contrasts the two businesses in the following video.

Airbnb is the faster grower. Revenue more than doubled last year to $250 million, The Journal reports, versus a 24% jump for HomeAway. The latter still has more listings, however: 890,000 paid listings versus about 600,000 for Airbnb.

HomeAway is showing strength in other areas, as well. Total visits to its site improved more than 15% in 2013 while the average revenue per listing improved more than 13% after accounting for currency effects. Cash flow from operations grew 9%, leaving the company with close to $400 million in cash and investments as of December. Another $350 million is on the way via a debt offering.

HomeAway plans to raise at least that much in convertible notes due 2019. For its part, Airbnb is looking to raise between $400 and $500 million, The Journal reports. Expect both companies to put serious capital to work at disrupting what remains of the traditional hotel industry.

Is there an opportunity for common investors to profit? HomeAway thinks so. In a recent interview for Travel + Leisure, vice president Alexis de Belloy said the short-term rentals market accounts for one-fifth of all U.S. hotel revenue. If he's right, and if the ratio shifts even slightly, Tim says outrageous growth -- and generous returns for stock investors -- will follow. Now it's your turn to weigh in. Do you think HomeAway can thrive alongside Airbnb? Why or not? Sound off in the comments section below.

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