SoulCycle Walks Away From IPO

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SoulCycle, the cycling fitness spin cycle chain, has pulled its initial public offering. The strange thing about the decision is that it filed to go public in 2015. Either its financials have fallen apart or it is worried about a choppy stock market that is no longer going anywhere but up.

In an SEC filing, the company’s management wrote:

Pursuant to Rule 477 of Regulation C under the Securities Act of 1933, as amended, SoulCycle Inc. (the “Registrant”) hereby respectfully requests that the Securities and Exchange Commission (the “Commission”) consent to the withdrawal of the Registration Statement on Form S-1 (File No. 333-205951), together with all exhibits and amendments thereto (collectively, the “Registration Statement”) effective as of the date hereof or as soon as practicable thereafter.

The Registration Statement has not been declared effective and no securities covered by the Registration Statement have been issued or sold. The Registrant has decided not to pursue the offering due to market conditions. Based on the foregoing, the Registrant submits that the withdrawal of the Registration Statement is consistent with the public interest and protection of investors.

The document was signed by Melanie Whelan, the chief executive officer.

SoulCycle’s form S-1, which is now three years old, showed revenue of $118 million for the first nine months of 2015, up from $78 million in the same period in 2014. It was the rare pre-IPO company with large profit margins. Net income for the period was $89 million, up from $19 million in the same period the year before. That means SoulCycle had extraordinary margins.

All valuations of SoulCycle were guesses, except for by people who knew its private valuation set as it raised money. Over the course of 2016, 2017 and so far in the first quarter of 2018, its business might have been crippled by a market flooded with storefronts. More people may have moved to cycling at home, which is the basis of the success of in-home spin service Peloton. Its value has been set as high as $1.25 billion.

Finally, the lack of an IPO may leave SoulCycle without a great deal of cash on its balance sheet. That may not be important if it is making money. However, the people who run and own the company will never get the really big payday of an IPO.