The continued run-up of the stock market has been impressive, particularly so given the coronavirus-driven recession. But investors continue to go deep into the market. At this point, some are suggesting that there’s no top to the market’s potential, and pundits have cautiously joked that the only casino consistently open during the pandemic has been Wall Street.
Of course, nobody really knows if the bull market will be sustained or if we’re just in a bubble. But what goes up, does come down, and the market makes new winners and losers every day. And when a company’s shares do take a hit, there’s inevitable PR fallout – which is why PR, IR and comms leaders should have a strategic plan to deal with falling stock prices.
While it can be a first instinct to say nothing, there are big drawbacks to this approach. By clamming up, a company is quite likely to get caught in a negative news loop. Because the only news about a company is bad (in the form of the stock price), it literally becomes the narrative and puts PR/IR in a purely reactionary position.
Also true is that a company’s stock price is only a point-in-time view of performance and market reception. By focusing on public-facing communication, built on positive corporate and product-driven messages – rather than a focus purely on financial matters – communicators can provide stakeholders and investors a preview of a better future.
Highly useful are outbound messaging efforts that highlight technology and new innovations, ideally as part of exhibiting an intellectual property portfolio that adds value to a company. Highlighting thought leadership also illustrates a positive, forward-looking vision. The only real caveat is that communicators should adhere to regulations from the Securities and Exchange Commission (SEC) and Financial Industry Regulatory Authority (FINRA), particularly in quiet periods.
A steady stream of news illuminating the positive aspects of a given firm will help ensure that investors gain visibility around positive and worthwhile corporate messages that aren’t myopic about stock performance.
When stock prices are volatile, it makes sense to revisit some IR principles, because investor confidence is bolstered when IR fundamentals are in place. This includes a robust IR website, high-quality support materials such as investor/analyst presentations, and digital/print annual reports. Earnings calls and other activities can be supported with social content, particularly via business-centric channels.
In addition, internal teams that have a role in financial communications should seek to avoid working in functional silos. Coordination enables internal groups to offer one another “air cover” while delivering a steady flow of reliable and timely news.
The combination of IR fundamentals with an integrated media relations program helps investors gain an abundance of relevant information that builds confidence. By advancing a compelling narrative based on a flow of positive information, firms can shift the focus away from daily attention on their stock price, enabling them to tell a more comprehensive – and effective — story about long-term value.