[ralph84]

I agree WeWork is overvalued, but the whole thesis behind an index fund is you can’t reliably pick winners and losers. If you can, there’s no need for an index fund. There were plenty of naysayers calling FANG overvalued at their IPOs as well. If you didn’t hold those stocks for the last 10 years you missed out on most of the overall market’s gains.

[scarface74]

No there really weren’t people saying FANGs were overvalued at their IPOs.

Facebook - was profitable and only IPOd because they had to. They had too many investors.

Apple - IPOd in the 80s

Amazon - maybe

Netflix - wasn’t seen as a tech company. Their business was just shipping DVDs.

Google - was a clear leader and already profitable at their IPO.

[ralph84]

We can leave Microsoft and Apple aside because their IPOs were so long ago, but there were certainly many periods in their history where a "tech savvy" investor would have wanted to drop them from an indexed portfolio because growth had stalled and they had no exciting new products on the horizon to justify their valuation.

On to FANG IPOs. If there weren't people saying they were overvalued at their IPO, their underwriters would have done a very bad job.

Facebook[0] - 'The problem is that the smart money on Wall Street simply doesn't think the company's prospects justify the $105 billion that the offering price implied. And no wonder. That values the company at 108 times 2011 earnings, requiring almost ridiculous financial growth to make sense.'

Amazon[1] - 'Online bookseller Amazon.com's push to sell some 3 million shares for as much as US$13 per share would value the company at $300 million - a pretty penny for a firm that lost about $6 million last year. And Amazon.com's prospectus suggests those losses could grow larger. Bill Bass, an analyst at Forrester Research, attributed the high valuation to "Internet inhalant" - the extra high that Net-related stock offerings can carry with investors. "Some people smoke Internet inhalant and their judgment gets bizarre," Bass said.'

Netflix[2] - 'Netflix is not profitable with an accumulated deficit of $141.8 million. The company had $4 million in operating losses on $30.5 million in revenue for the quarter ended March 31 on $20.4 million in operating losses on $17.1 million in revenue for the same time period the year before.'

Google[3] - '"Although Google enjoys faster growth and higher profitability, we see several risks to its valuation, which may mean the stock ultimately trades at a discount to its peers," says Susquehanna Financial Group analyst Marianne Wolk.'

[0] - https://www.sfgate.com/business/article/Facebook-IPO-undersc...

[1] - https://www.wired.com/1997/03/amazon-com-high-on-ipo-so-is-i...

[2] - https://money.cnn.com/2002/05/23/markets/ipo/ipos/index.htm

[3] - https://knowledge.wharton.upenn.edu/article/lessons-from-goo...