Flash-storage company Pure Storage Inc. opened below its initial public offering price on Wednesday, signaling that a difficult summer for tech IPOs may be seeping into the fall.

Shares slipped 2.2% to $16.62 in early trading after pricing late Tuesday at $17 a share.

By breaking its IPO price in early trading, it signals that investors are still wary of putting money to work for highly anticipated new companies.

The deal raised $425 million by selling 25 million shares, giving the company a market value of $3.1 billion. Pure Storage had planned to offer 25 million shares at $16 to $18 a share, according to regulatory filings.

The Mountain View, Calif.-based company's IPO came at a tough time for U.S. stocks. The third quarter was the worst quarterly stock-market performance since 2011, and investors pulled a net $46 billion out of U.S. stock funds in July and August, according to Investment Company Institute. Heading into Pure Storage's deal, some investors and market participants questioned whether mutual fund and hedge fund managers would be interested in putting money into an IPO after some have stumbled.

Earlier this month medical-technology company NovoCure Ltd. came at a price below the valuation at which it last privately raised venture capital from investors. Separately, on Tuesday, mobile provider Digicel Group Ltd. said it canceled its planned IPO citing current conditions, particularly in emerging markets.

In 2015 there has been a dearth of technology company IPOs. Not including Pure Storage, only 19 companies in the tech sector have gone public so far this year through, according to Dealogic, compared with 62 in all of 2014 and 48 in 2013.

At the same time, there is an increasing number of private companies valued by venture firms at $1 billion or more that have yet to tap the public markets. How a company like Pure Storage fares in its IPO could affect their financing plans, some investors say.

Pure Storage began trading on the New York Stock Exchange under the symbol "PSTG" on Wednesday. The deal was led by Morgan Stanley, Goldman Sachs, Barclays, Allen & Co. and Bank of America Merrill Lynch.

Write to Corrie Driebusch at corrie.driebusch@wsj.com

 

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(END) Dow Jones Newswires

October 07, 2015 10:45 ET (14:45 GMT)

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