NetSuite on Wednesday set the initial price of its stock at $26, greatly exceeding its original estimate.

The company is selling 6.2 million shares of stock. It said in a filing with the U.S. Securities and Exchange Commission that the proceeds from the sale would net it $151.9 million after expenses.

NetSuite, which sells a line of hosted business software, company initially set the suggested price range for its stock at $13 to $16, and subsequently raised it to $16 to $19 and then $19 to $22. The stock is now trading on New York Stock Exchange under the symbol "N." After rising to $39.01, shares had dropped to $25.76 at 10 a.m. Eastern Time.

The company set the price by running an online "Dutch" auction, in the same fashion of search giant Google, instead of having underwriters set the price.

Scott Sweet, managing director of IPOboutique.com, a firm that tracks the IPO market and offers investment advice, said NetSuite is greatly overvalued as a result of the auction.

"Once again the Dutch auction concept failed to live up to its self-described mantra as being a better conduit in the pricing of an IPO by the investors than the standard method of pricing by the underwriters," he said in an e-mail message Thursday. "In past Dutch auction deals, and it appears the same in this case, investors put in overzealous high bids to 'beat' others in a scramble to get shares. In doing so, it is highly likely that it has greatly diminished the IPO's performance and highly overvalued the company."

NetSuite has said it plans to use proceeds from its IPO to pay off an $8 million balance on a line of credit with Tako Ventures, an entity controlled by Oracle CEO Larry Ellison, and to possibly make acquisitions.

Ellison controls about 60 percent of NetSuite's outstanding stock -- some 31.9 million shares.

NetSuite said Wednesday that Ellison has now completed the transfer of those shares into a holding company, NetSuite Restricted Holdings. The move is meant to "effectively eliminate" Ellison's voting power and avoid potential conflicts of interests, NetSuite said.