Maybe markets would just correct themselves later, but in the meanwhile a lot of people went broke and a lot of businesses closed, because a company was giving out free meals (payed by someone else who is also going to lose money). In the end who profits? Only the "charlatans" who managed to convince others to give them absurd amounts of money. Everybody else comes out with a bloody nose.

And yes, of course the strategy might work if there is a substantial network effect. But if there isn't, such as in the case of Uber, or WeWork, or even maybe Netflix, then the whole operation can only end in losses.