The price of the stock, listed as ARST on the NASDAQ, closed at $8.78, although shares traded as low as $8.07 earlier in the day. Shares opened at $9, on the lower end of the expected range.
The NASDAQ as a whole fell more than 41 points, or 1.74 percent, in trading.
Cupertino, Calif.-based ArcSight raised $54 million, to bring its market capitalization to $278.5 million, according to reports. The company offered six million shares; a group of stockholders purchased 861,919 shares.
The 7-year-old company has sold products to more than 400 customers around the world. ArcSight said it plans to use proceeds gained from the IPO for "general corporate purposes, including working capital and potential acquisitions."
Brendan Hannigan, president and chief operating officer of Q1 Labs, a network security management firm, said an IPO is good news amid the general vibe of fiscal downturn.
"It's thrilling to watch a fellow pioneer of the network and security management space listed on Wall Street," he said. "This truly validates the market growth potential despite recent economic concerns."
Initial public offerings (IPOs) are a rarity in the IT security space, as many companies have been scared off because of risk and high costs.
In October 2006, open-source intrusion prevention system maker Sourcefire said it was going public. Shares, though, are off more than two-thirds their initial value.