(Reuters) - Shares of YuMe Inc YUME.N rose as much as 9 percent in their market debut after the online advertising company’s IPO was priced 25 percent below the low end of the expected range.
The company, which delivers Web-based video advertisements, priced its offering of 5.1 million shares at $9 each and raised $46 million. It had initially set a range of $12-$14 per share.
YuMe shares touched a high of $9.85, valuing the company at about $312 million, but were up just 2 percent in mid-morning trading.
YuMe is backed by venture capital firms Khosla Ventures and Accel Partners, which together now own 34 percent of the company.
Advertising technology companies such as YuMe help advertisers buy ads more efficiently and help websites sell space on their own pages.
Display advertising spending in the United States alone is expected to reach $17.7 billion this year, according to research firm eMarketer, as companies look to advertise across different platforms including mobile and tablets.
But in a sector characterized by hundreds of companies, it is hard to tell whether any has a real technological edge.
Many smaller ad tech companies are trying to grab market share from Google Inc (GOOG.O), whose slice of the sector is expected to climb to 20.7 percent next year from 17.6 percent this year, according to eMarketer.
A handful of ad tech companies that went public this year have seen their stocks under-perform.
Mobile marketer Millennial Media Inc MM.N and online advertising management platform Marin Software Inc MRIN.N have lost nearly a quarter of their market value so far this year.
Shares of Tremor Video Inc TRMR.N, the video advertising company to go public in June, is already trading below the IPO price of $10 per share.
YuMe’s loss widened to $3.3 million, or 69 cents per share, for the latest quarter ended March 31 from $1.5 million, or 33 cents per share, a year earlier. The company’s revenue, however, rose more than 32 percent to $26.6 million.
The company’s shares were up 2 percent at $9.19 on the New York Stock Exchange at 1035 ET. About 1.4 million shares had changed hands.
Reporting by Avik Das and Anil D'Silva in Bangalore; Editing by Sreejiraj Eluvangal and Sriraj Kalluvila