24/7 Wall St.

The initial public offering of Square Inc. (NYSE: SQ), the valuation of which financiers thought was too high, proved otherwise with a share price that surged on the first day its stock traded. Until the first shares changed hands, there was widespread worry that unicorns had lost their appeal as ways to make money. That barrier was challenged again as home-renting site Airbnb raised $100 million, which puts its value at $25.5 billion. Based on its revenue, the argument that it is overvalued has support.

According to private company research firm PrivCo:

Airbnb [Private Company Ticker Symbol: AIRBNBP] has reportedly raised a round of over $100 million in funding at its previous valuation of $25.5 billion. Airbnb generated $340 million in revenue in the third quarter, on $2.2 billion in total bookings. The company is projecting $900 million in revenue for this year and expects to achieve profitability in 2016. According to PrivCo data, the company closed a massive $1.5 billion Series E funding this past August from General Atlantic, Hillhouse Capital and other investors at the same valuation.

These are large venture capitalists, which means they are viewed by other private company investors as “smart money.” If they invested when the valuation of Square was shaky, the math of their valuation must have been built on valuation measurements lost on most investors and other outside observers.

Presumably the market for renting other people’s homes while those people are away is nearly infinite. Maybe if the whole world of homeowners is taken into account that is true. Whether all these people will use Airbnb is the core assumption about its valuation. And that assumption cannot be any more than an educated guess, since the Airbnb model and business is presumably in its very early stages.

Over $25 billion is a lot of money, but some of the unicorns have proven that wild valuations are just fine.

ALSO READ: America’s 50 Best Cities to Live In