Heighten or Maintain Company Visibility to Investors: Don't Be Deterred by Economic Headwinds
It is easy to pull back your IR marketing plans when the headlines are negative and the markets slump. Economic cycles come and go. No matter what the headlines tout, there is always an opportunity to tell your company’s story. And, considering that post MifID II, small- and mid-cap companies have less visibility with investors from traditional sell-side coverage, the onus rests on company management teams to own their investment thesis, control the narrative, and provide insight into the company’s strategies and quarterly results.
Human nature is such that many management teams often limit proactive investor communications when turbulence such as supply chain disruptions, inflationary cost pressures, and weakened demand adversely affect financial performance. While the psychology behind this temptation to “hide” during challenging environments is understandable, such a mindset is detrimental.
Investors always crave a consistent flow of company information far beyond basic quarterly results, and during challenging times, the appetite for information only grows. Don’t be deterred by feeling that your company has no news. Take a position on an industry topic. Make your management available for questions via fireside chats. Investors reward companies providing the greatest transparency. Even if the near-term thesis is unfavorable, investors respect management candor, which fosters trust with current and future shareholders.
Other considerations for messaging include:
- Discussing strategic initiatives.
- Incorporating your company’s sustainability goals (and opportunities).
- Positioning new business or service offerings that may provide higher margins and faster growth, and may be overlooked by traditional sell-side analysts.
- Preparing for discussions on consolidation opportunities that could arise due to weaker competitors.
- Highlighting your company’s three-year financial targets and include a roadmap on how management intends to achieve them.
How can you communicate these topics? Use non-deal roadshows, whether in person or virtual. Conduct virtual fireside chats with other members of management beyond the CEO who can help tell the story and might not be visible during earnings conference calls. Virtual events can be archived on your website, which can witness a two- to three-fold increase in viewership relative to the live broadcast attendance.
If you have bad news, meet it head on. Be transparent. Face challenging news head on and discuss your plan to improve results. Refocus investors on the company’s future opportunities.
While there is no denying current financial headwinds are affecting most sectors, remember that company peers face the exact same challenges. Economic cycles come and go. Investors reward companies that reliably communicate on a proactive and transparent basis, regardless of the economic cycle. Use the next few quarters to cement relationships with current shareholders and attract future investors as financial performance strengthens.
About Water Tower Research – Modernizing Investor Engagement and Stakeholder Communications Strategies
Water Tower Research is built on the foundation of democratizing information flow. We bridge the growing information gap between companies and investors through our investor engagement strategies and open-access research platform, utilizing our veteran Wall Street equity research analysts and IR professionals
-Tim Gerdeman, From the NIRI Virtual September 2022 Newsletter