Wall Street may be wary of YogaWorks after other recent IPOs soured

YogaWorks Inc. said Thursday that it was postponing its initial public offering citing “market conditions” through a spokesperson, but it’s not the market that is holding it back.

In fact, the IPO market is very healthy, with the second quarter marking its strongest three-month period in two years, according to a report from PricewaterhouseCoopers. The second quarter had double the number of IPOs as the first quarter.

“I would characterize it as really solid,” said David Ethridge, U.S. IPO services leader at PwC.

As for the overall market, the S&P 500 SPX, +0.06% and the Nasdaq COMP, +0.13% hit intraday highs Thursday after closing at all-time highs the day before. The equity market has been on a tear all year with the main indexes hitting repeated records.

That suggests that “market conditions” has become a catchall phrase, covering anything from actual volatility or selling to poor demand for the company during the roadshow.

In this case, it is likely valuation, according to one expert.

“There was valuation sensitivity, and I believe it was all about that,” said Kathleen Smith, principal at Renaissance Capital, a manger of IPO-focused ETFs.

If the yoga studio chain had priced at the midpoint of its $12 to $14 range, it would have commanded a public market capitalization of $187 million. While that valuation pales in comparison to some of the billion-dollar startups that have hit the market, it is 3.4 times the company’s 2016 revenue and it has not yet posted a profit.

The recent IPOs of Blue Apron Holdings Inc. APRN, -1.50% and Tintri Inc.