The scene for initial-public offerings of the last few years has been quite a rager. Starting a little over three years ago with the massive Facebook FB, -1.73% offering and up through more recent tech darlings like GoPro GPRO, +1.74% and Fitbit FIT, -0.94% , investors have had plenty of newly minted tech stocks to toy with.

But for all the talk about “unicorns” like Uber and the supposed promise of tech startups, the IPO scene is increasingly looking like a party that is winding down.

Or, at least it should be before the cops call the neighbors or someone falls off the balcony.

Reasons abound for us to be skeptical of the nosebleed valuations for multibillion-dollar, venture-backed startups. The rise of the late-stage IPO means that many of the companies with big price tags and an air of legitimacy are rarely prepared for the bright lights of public scrutiny. Unlike a true capital market where millions of participants work together to determine fair value, a private funding round requires only a few well-heeled firms in a bidding war … and it’s off to the races.

Tomasz Tunguz of Redpoint, a VC firm with stakes in tech startups including mobile payments company Stripe and vacation rental portal HomeAway, put it this way on his blog:

“If high priced financings are the defining characteristic of this part of the technology cycle, one has to wonder what this private market exuberance implies for the next cycle. Glass half-full: we’re going to see a huge swath of IT IPOs in the next few years. Glass half-empty: many of the companies that have raised massive growth rounds won’t be financially fit enough to be able to go public, and investor/employee/shareholder liquidity will be a major challenge.”

Undoubtedly, a few legitimate companies out there will come to market in a big way and deliver shareholder value.

But it increasingly looks like the sketchier tech startups are running out of runway. If they haven’t already executed IPOs and achieved liftoff, it could be a very messy scenario for these firms and their investors.

Market turmoil could sap appetite for IPOs

The idea of a “risk-on, risk-off” market has been around since the Great Recession and the financial crisis, and thankfully for investors — and tech startups — the environment has mostly been “risk-on” in these past few years.

But now that we have suffered an official correction with a 10% decline for the market in August — including an intraday plunge of 1,089 points for the Dow DJIA, -1.84% that sent the major indices to 18-month lows — the story could be quite different in late 2015 and into 2016.

Whether you want to blame a slowdown in China or jitters over what the Fed will do next, the bottom line is that investors are starting to worry about the sustainability of this bull market.

That naturally creates a less favorable environment for untested and high-risk IPOs.

I’ll admit we’ve been down this road before. A rough start to 2014 had lots of pundits talking about how the IPO window had closed, and for a time things cooled off on the IPO scene. But lo and behold, amid an 11% gain for the S&P 500 SPX, -1.15% in the second quarter, 75 IPOs were stuffed into the second quarter of 2015 as startups struck while the iron was still hot.

But the skeptic in me wonders whether that’s not just further proof of the VC crowd running for the exits to make a quick getaway.

IPO pop to IPO flop

That getaway, of course, involves an oversubscribed IPO on the first day of trading and a brief uptrend over the first several weeks on Wall Street. Under the cover of rising share prices, the insiders get out — and get paid — while the regular Joes out there are left holding the bag.

Except, investors are starting to figure out this routine.

Take my favorite stock to kick around, Twitter TWTR, -0.62% . It offered at $44 in late 2013 and climbed all the way to $69 in short order … and now trades for under $25 a share.

Take trendy e-commerce site Zulily US:ZU, which hit a peak of almost $70 a share in early 2014, good for a $9 billion valuation, but crashed and burned into the single digits until QVC parent Liberty Interactive US:QVCA (QVCA) agree to buy it for $2.4 billion — less than its value at IPO less than two years earlier.

Alibaba BABA, +0.51% claimed the title of the largest IPO in history in late 2014, and in less than a year it has plunged below its first-day pop. In Monday’s rout, it briefly sank well under its actual offer price of $68 a share.

These IPO flops have burned plenty of traders, and assuredly have made many investors gun-shy of the next round of hot startups hitting Wall Street.

Also read: Hot tech stocks can’t possibly live up to this bubble hype

It comes down to numbers

At the end of the day, stocks like Alibaba and Twitter have to stand on the merit of their business. And while it’s possible to fool a small group of breathless investors in a private placement, it’s much harder to do in the cold light of day on the New York Stock Exchange.

Take Snapchat, supposedly valued at $16 billion based on the latest funding round … but losing money like a sieve as of last year. Leaked financials obtained by Gawker show a $128 million loss on just $3 million in actual revenue for January through November 2014.

I know cash burn is supposed to be expected with tech darlings like this, but that is just insane for a company allegedly valued at $16 billion.

And, of course, there’s Uber.

Gawker also has documents on the ride-sharing service showing that Uber pulled in just $57 million or so in revenue for the second quarter of last year but posted a nearly $108 million loss on the quarter.

Investors might be willing to pay a premium for growth potential, but if Uber went public today at $50 billion, it’s safe to say all the optimism would already be priced in.

This is the landscape of IPOs in 2015, and it doesn’t bode well for startups looking to tap public markets going forward. In an environment like this when newly minted companies increasingly fail to deliver real profits — either on their balance sheets or to investors who buy in on the first day of trading — you have to wonder why the party animals on Wall Street keep going back to the punch bowl.

Because even if they do for a little while longer, there’s no guarantee they’ll be able to stomach declines like this forever.