New York CNN Business  — 

Money losing unicorns are falling out of favor with investors. The dismal performances of Uber (UBER), Lyft (LYFT) and Slack (WORK) after they debuted on Wall Street earlier this year could be a sign that the appetite for unprofitable companies is waning.

Online braces seller SmileDirectClub (SDC)’s disastrous debut on Thursday doesn’t help matters. The company’s shares plunged more than 25% in their initial public offering, although SmileDirectClub (SDC) did rebound a bit Friday. It too is losing money.

That could be bad news for companies like We Company, the owner of WeWork, which has racked up a staggering amount of losses and has faced criticism of its corporate governance structure.

We Company plans to list its shares on the Nasdaq sometime within the next few weeks, even though it reportedly may be forced to slash its valuation by more than half to perhaps as low as $10 billion. Japanese tech giant SoftBank, the largest investor in We Company, is also said to have urged the coworking space firm to delay its IPO.

The buzzy cycling equipment and streaming fitness services company Peloton Interactive is set to debut as well.

Peloton’s sales have soared but losses are spinning out of control, hitting nearly $246 million in its latest fiscal year, up from $48 million a year earlier.

Investors should be wary of unprofitable unicorns

That skepticism could be a good sign, says Doug Peta, chief US investment strategist at BCA Research. It shows that investors are not in the midst of a mania like they were in the late 1990s, when many dot-com companies that had little in the way of revenue, let alone profits, were going public and more than doubling on their first day of trading.

“We Company should try to be as profitable as possible. I’m not sure how elevating the world’s consciousness fits into that framework. It seems awfully new age-y to me,’ Peta said, referring to the company’s derided mission statement in its IPO filing.

“It’s a good sign that investors are pushing back on such a grandiose and somewhat amorphous business plan. This shows it’s not 1999. People have not taken leave of their senses,” he added.

Some of the more successful companies that have gone public over the past few years are either already profitable or expected to generate actual earnings later this year and in 2020. That includes e-signing software company Docusign (DOCU), web conferencing firm Zoom Video (ZM) and plant-based food leader Beyond Meat (BYND).

Many of the money-losing companies looking to go public now could struggle because investors are more discerning and are looking for profits, noted Alan Adelman, senior fund manager with Frost Investment Advisors.

“There has been a shift from growth stocks to more value stocks,” Adelman said. “Some of the recipients of the go-go growth trade have had the wind taken out of their sails.”

Google and Facebook were already profitable when they went public

The big drops in Uber, Lyft and Slack are evidence of that trend. Longer-term investors are realizing it may be too soon to take a flier on some of these startups since there is no sign that they will be able to generate profits in the foreseeable future.

But companies like Uber and Slack may be more similar to the scores of dot-coms that debuted in 1998 and 1999, as opposed to Google owner Alphabet (GOOGL) and Facebook (FB), for example.

While there were concerns about corporate governance at both of those companies at the times of their IPOs, Google and Facebook were also undeniable market leaders in their industry when they went public. And both were profitable.

So while Google shares didn’t skyrocket on their first day and Facebook’s even fell in their first few months as investors worried if the company would successfully transition to a more mobile-focused strategy, each stock has soared in the past few years and are both now among the world’s most valuable companies.

WeWork, Uber and Slack have a lot to prove before any of them will be able to join the ranks of the FAANG club.