Stitch Fix shares began trading on the Nasdaq stock exchange at $16.90 Friday morning, having priced at $15 the night before.

The stock briefly skyrocketed more than 20 percent on its initial public offering before settling to a gain of about 15 percent by midday.

Stitch Fix raised $120 million Thursday evening in a downsized IPO that priced below its indicated range of $18 to $20. The online retail service had originally planned to sell 10 million shares in the offering, though only sold 8 million.

Investors had demanded a discount amid concerns over the company’s profitability and transparency of its financial metrics, a source familiar with the situation said.

Stock jumps from IPO prices are particularly important to institutional investors toward the end of the year, as funds close out their books. Investors were skittish about potential fourth-quarter surprises, a trend that has been set by Snap and Blue Apron, the source added.

An opening price of $16.90 values Stitch Fix at roughly $1.63 billion. The company was last valued at $2 billion, when founder and CEO Katrina Lake sold off about $1 million of her stake late last year.

“I feel like there’s a little bit of hair on this one,” John Martinko, co-president at Drexel Hamilton, told CNBC’s “Worldwide Exchange” on Friday morning. “E-commerce in a box is still a little bit of an overhang from Blue Apron. But I believe in this company. … The stylist and their algorithms makes sense to me.”

Blue Apron and Snap have tumbled since going public in 2017, prompting analysts and investors take a closer look Stitch Fix’s ability to grow and turn a profit.

Further, some say the IPO market is beginning to show signs of fatigueafter rebounding earlier this year.

Stitch Fix is a play on an increasingly popular “subscription box” model, in which customers pay to have regular — often monthly — shipments of goods. These models are attractive because companies can forecast revenue, but many have struggled to balance sales against steep marketing costs.

With Stitch Fix, customers submit size, budget and style preferences before receiving a box of five apparel and accessories items, which can either be purchased or returned. It hopes its personalized service will reach and appeal to more shoppers than a traditional e-retailer.

“This industry is out of date and largely untouched by technology or innovation,” Lake said about retail during an appearance at the Nasdaq on IPO day. “We have an incredible opportunity in doing something totally different.”

Stitch Fix’s few venture-capital investors include Baseline Ventures and Benchmark Capital, which invested in the company at a $300 million valuation in 2014.

Stitch Fix’s Lake, the only woman to lead a tech IPO this year, still owns roughly 15 percent in her company.

Stitch Fix now trades on the Nasdaq under the ticker “SFIX.” Goldman Sachs and JPMorgan were the lead underwriters for this offering.