In this regular article, we ask IR professionals how they would respond to a specific operational issue. This time we asked what people would do if they discovered their company is the subject of the latest chatter in the WallStreetBets Reddit group.
Peter Seltzberg, managing director of IR at DarrowIR
What we have learned from the GameStop situation this year is that retail investors, hobbyists and other non-institutional accounts can move markets and are therefore relevant to investor relations – so we certainly wouldn’t ignore it.
The first thing I would do is advise our executive management team and the compliance department/corporate counsel as to the situation. If the posts are regurgitating content that is already in the public domain and isn’t objectionable, or isn’t creating improper expectations, then there is probably nothing to do.
If the post contains really outrageous misinformation or something slanderous, non-public or otherwise inappropriate and affecting the shares, we might be in the position where an official/direct response is the correct move.
I would always defer to legal on this, and it’s probably best to also include our head of marketing/head of media to keep them looped in and potentially ask for input.
The most likely response would be to:
- Identify who the influencers are and determine whether outreach/ engagement makes sense
- Get an understanding of what the content is suggesting about the company so we can be prepared for questions that may arise
- Discuss with the top shareholders and research analysts whether they are seeing/hearing any of this and see if they want to collaborate on an action plan
- Consider whether it may be appropriate to include content in upcoming press releases, conference call prepared remarks or other communiques that support/do not support the assumptions and messaging of the Reddit board content.
Aki Vesikallio, director of investor relations at Cargotec
Cargotec’s shares are listed in Finland and, during recent years, investing in equities has become increasingly popular here as well.
The Covid-19 pandemic has been working as a catalyst on the ongoing investing boom and we have seen a new generation of investors entering the market and seeking information outside the traditional channels. When something unexpected happens regarding a company, to avoid any misunderstandings, a professional investor relations team must work transparently and proactively in its communication to all investors, including the increasing number of retail investors.
For example, we have partnered with a local retail investor-focused broker that distributes our content to its clients. We also actively ask retail investors to submit questions on social media, which are then answered in our blog posts. In addition, we welcome all investors to subscribe to our quarterly newsletter.
Our next step is to further enhance our investor relations communication across a range of social media platforms. To reiterate: open, continuous, timely, transparent and to-the-point communication is the main item in a professional IR team’s toolbox.
Vladimir Valuzhsky, head of the communications and IR department at Severstal
The IR world was impressed with the share price boost of GameStop but alarmed by the issues suffered by Melvin Capital, the hedge fund at the center of the GameStop trading frenzy, which lost 49 percent on its investments during the first three months of 2021, according to some sources.
Our responsibility is to use the current strong stock market environment to help brokers and stock exchanges in teaching retail newcomers the ABC of value investing.
Channels like TikTok videos, broker chats, Clubhouse rooms, Instagram streams and Zoom webinars with guest speakers can be very helpful in building trust and relations with your company’s retail investor base, thus hopefully minimizing the risk of a co-ordinated retail attack on your firm’s stock. My advice would be to make sure your company is present in every major platform where retail investors discuss stock markets today.
In addition, adapting your IR communications for the retail investor can drive your share price. During 2020 Severstal saw its proportion of retail investors rise by 5 percent to 30 percent, while the share price rose 36 percent over the same period.
This article was originally published in the Summer 2021 issue of IR Magazine. Click here to access the magazine