Elevate Credit shares bounced on their first day of trading on Thursday, despite a disappointing IPO pricing.
Shares closed at $7.76 per share on Thursday, up more than 19 percent. The stock began trading on the New York Stock Exchange under the symbol ELVT.
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The company priced its IPO at $6.50 a share, well below the expected range of $12 to $14 a share, as investors express continuing skepticism of new online lending models. At a $6.50 share price, the market capitalization would be $260 million, down from $490 million had the stock priced at $14, the top end of the previous range.
"We raised just a little under the amount that we intended to raise, so we'll be able to pay down the debt that we wanted to pay down," CEO Ken Rees told CNBC's "Squawk Alley" on Thursday.
The company will offer 12.4 million shares, more than the 7.7 million shares initially expected. The company had at one point proposed to raise up to $100 million, but is now on track to raise less than $93 million.
The start-up offers alternatives to payday loans, title loans, pawn and storefront installment loans to "nonprime" consumers with credit scores of less than 700 in the U.S. and U.K. Backed by Sequoia Capital, the company grew gross revenue 34 percent year over year to $580.4 million by the end of 2016.
"We are serving a huge percentage of customers that have terrible credit options," Rees said. "We've been growing like crazy .... and I think that is is because of this large, underserved market we have."
But net losses also swelled to $22.4 million by the end of 2016, up from $19.9 million the prior year. The effective annual percentage rate (APR) on the company's loans have fallen about 42 percent since 2013, but are still about 146 percent, according to regulatory filings.
The IPO, underwritten by banks like UBS Investment Bank, Credit Suisse, Jefferies, Stifel and William Blair, will provide yet another test of the public markets, after companies like Snap and MuleSoft broke a long dry spell of big tech IPOs.
Elevate said in January 2016 it would delay its IPO, in part due to volatility in the public market. By mid-January 2016, stocks were near a 15-month low, and companies like Lending Club saw shares plummet. Today, the picture looks much different, as major indexes come off all-time highs.
Still, Rees said that he thinks Elevate's business is actually "a great hedge against any future volatility in the market."
The new public offering will also come amid a different regulatory environment, as President Donald Trump has vowed to roll back regulations, including those that govern consumer finance and lending.
"What we find is that our customers are somewhat recessionary all the time — they're used to dealing with the world where they have maybe less savings, more income volatility — they get through," Rees said. "In a recession, as we saw in 2008 to 2009, everyone else tightens up their credit. We start seeing better quality through the door."
— Ari Levy contributed to this report