Groupon: One Day Later

It's been one trading day since Groupon GRPN went public, raising $700 million in the offering. This morning, Benchmark put out a research report on the Chicago-based merchandising company, with an Outperform rating and a $32 price target. This begs the question. How can The Benchmark Company come out with a report on Groupon before it has been a publicly traded company for a week, and be so positive on the company? Benzinga has written extensively about Groupon, both negatively and positive. (FULL DISCLOSURE: Benzinga is backed by LightBank, a venture capital firm started by Groupon co-founders Brad Keywell and Eric Lefkofsky. ) The company CFO was on CNBC last week, and said that the company had plenty of room for growth, but there are many people skeptical of that notion. CNBC's Jim Cramer asked CFO Jason Child what sets Groupon apart from companies like Living Social, Google GOOG, or Amazon AMZN. Child said that the company has over 250,000 merchants across the globe, and that Groupon provides these merchants with customers walking through the door. Groupon has been the most reliable source to drive traffic. He also said that the company is trying to increase the number of dollars each customer spends. That is exactly what Benchmark says, that the company has "pioneered an Internet commerce operating system for local businesses." Yet neither Child nor Benchmark explains just exactly how Groupon really is different. Groupon is only larger because it started the industry, but that does not mean that it is best in class, or even that the merchants are happy with the company. There have been countless reports that the company does not actually generate any revenue for the merchants. The negativity on this company is almost astounding. For the company to win the trust of shareholders and the media alike, it will have to do what it says it is capable of doing. Transforming an industry and not having any more snafus (accounting, executives saying outlandish things, or reporting revenues that are not accurate.) So far, the company has not won the trust of anyone, and that is the reason why shares are down 4%, despite getting positive coverage from Benchmark this morning. Time will tell with this company, whether it is the next Amazon AMZN, as the company claims it is, or another flash in the pan.