Big-name IPOs DoorDash Inc (NYSE: DASH) and Airbnb, Inc. (NASDAQ: ABNB) got off to volatile starts on the market this week. Some investors believe these two growth stocks are just getting started, while others are skeptical of the stocks’ massive valuations.
Buffett On Uber: Berkshire Hathaway Inc. (NYSE: BRK-A) (NYSE: BRK-B) CEO and legendary Wall Street investor Warren Buffett hasn’t weighed in on DoorDash and Airbnb specifically, but he spoke about another high-profile IPO in Uber Technologies Inc (NYSE: UBER) back in 2019.
“In 54 years, I don’t think Berkshire has ever bought a new issue,” Buffett told CNBC.
“The idea of saying the best place in the world I could put my money is something where all the selling incentives are there, commissions are higher, the animal spirits are rising, that that’s going to better than 1,000 other things I could buy where there is no similar enthusiasm … just doesn’t make any sense.”
Resist The FOMO: The fear of missing out on a popular IPO can cloud investors’ judgement, leading them to make poor investment decisions, Buffett has said.
Berkshire made headlines by investing in the IPO of Snowflake Inc (NYSE: SNOW) earlier this year.
Most Buffett followers believe Berkshire portfolio managers Todd Combs or Ted Weschler — not Buffett himself — were responsible for the Snowflake buy.
So far, the DoorDash and Airbnb IPOs have been tremendous successes, but Buffett also has some advice for investors who missed the chance to get in cheap.
Just because an investment happens to work out for others doesn’t mean it was a smart investment.
“You don’t have to really worry about what’s really going on in IPOs. People win lotteries every day, but there’s no reason to let that affect [your investing strategy] at all,” Buffett said back in 2016.