Investor Relations During COVID-19: Most Frequently Asked Questions
1 April 2020
By Vanessa Hartung
The impact of COVID-19 on the markets – and the world – has been significant. In this time of uncertainty, there are a lot of questions on how to successfully navigate through the storm. The need for consistent communications is clear, but what should be shared? And when? And what about the upcoming earnings season?
With so many questions in regards to what IROs should and shouldn’t do in today’s current environment, we connected with Matt Tractenberg, IR Partner at Q4, to get some answers. He has shared a list of the most frequently asked questions he’s been receiving lately, as well as his recommendations on how best to proceed. Here are the top 7 FAQs:
- What should IROs be doing?
- The number one thing is communicating. Be clear that your intention is to provide accurate information when it becomes available via a public channel, so everyone has access at the same time. It’s also important to establish a secure announcement process and ensure all communicating functions are lockstep to avoid inconsistent comments to employees, partners, customers, and investors.
- Remain accessible and communicative, but request the time and space from your audience to allow the leadership team to run the business.
- Any announcement from the company should be relevant, timely, and consistent, and be made by an approved and trained spokesperson.
- Begin to introduce the concept of business resiliency, and socialize the need for this messaging internally.
- Stay connected with employees. Now more than ever, it’s key to remain engaged with your team. Schedule regular video meetings to talk about the current plan, how each is holding up, tips and tricks to get through the day, and brainstorm new ways to do your jobs.
- Stay connected with other IR colleagues. It is not only helpful to get advice from others outside your organization who have managed through other global crises and may have useful tips for you; it’s downright therapeutic!
- Last but not least; Take care of yourself and your family, too. This is not only a business issue but a social and personal one as well. It’s easy to get overwhelmed.
- What should IROs avoid doing?
- Resist providing your personal opinion at this time or offering opinions about your competition or peers. Your audience may not be able to distinguish between personal and corporate positions.
- Avoid guessing what the impact may be. Companies that did this in February have already rescinded many of those comments. We are in a time of unprecedented uncertainty regarding the depth and duration of this pandemic. The Street does not expect you to know when this will end. They only need to know you understand the gravity of it and have a plan to navigate it to the best of your abilities
- We suggest you avoid taking any action that is designed to support the share price. Public comments regarding the business impact today may be inaccurate in a week’s time. Valuations today appear to be impacted by non-fundamental factors. Risk mitigation is top of mind.
- What should I do with regards to guidance?
- Few, if any, forecast models are accurately predicting future results. With that in mind, many investors are assuming the worst. All companies and sectors are impacted differently. If you believe that your Q1 or 2020 guidance is no longer accurate, consider withdrawing it via press release as many others have. Ensuring you retain trust and credibility is paramount today.
- Many companies have done this and our team can provide examples and data to support your decision.
- On your earnings call, consider offering the investment community more than one scenario with regards to Q2 or FY-2020. Communicate clearly your assumptions, which scenario you selected, and why.
- This allows shareholders to question or adjust those inputs as they see fit.
- Should I pre-announce results?
- Remember, most companies will be impacted by this pandemic. Wall Street has said they are unlikely to rely on any previously offered guidance.
- We do not believe a pre-announcement is necessary or expected. However, if you believe that you have accurate data that would be helpful to the investment community, offering it via a release may be considered.
- Be aware that the market may expect this going forward, so ensure you position it as “…increasing transparency and timeliness during this period of uncertainty…” and that a complete discussion will occur on your regularly scheduled earnings call.
- Should I postpone my AGM and Q1 earnings call? It depends on why. Here are a few important considerations:
- Current regulations stipulate that your AGM must be held no more than 6 months post your year-end report, and the 10Q must be filed no more than 40 to 45 days post quarter-end, depending on public float. If you are considering postponing beyond these boundaries, it will require regulatory approval which will, in turn, garner a lot of attention and questions from your investors. You need to be prepared to manage the inbound calls and perceptions around this delay.
- There are several options for a virtual AGM. First, check with your general counsel to ensure that your state allows it. Second, vendors, including Broadridge, offer virtual AGMs and ensure that access and voting requirements are met. Also consider recording the presentation portion of your AGM and posting it to your IR site, as investors are appreciative of any recent disclosures.
- With regards to your Q1 call, if your accounting department can produce accurate numbers and your leadership team has confidence that the results can be discussed well, we suggest you keep the date. Providing historical results and offering accurate guidance should be separate exercises. One does not require the other.
- Should I be reaching out to targeted non-holders?
- Most investors today are seeking information you’re unlikely to have, particularly as it related to providing an accurate view of 2020. If investors want to discuss long-term strategy or operational elements, have that conversation. Otherwise, consider waiting until we see some relief. Understand that most PMs have limited attention for thinking about initiating new positions, as most are scrambling to secure portfolios and assess the health of core holdings.
- However, we do suggest that you have a list of contacts you believe would be receptive. Additionally, you may have incoming calls from PMs that you’ve previously spoken with that view current prices as an opportunity. When that occurs, we suggest you engage, but ensure the conversation does not address the current environment. Remain focused on strategy, markets, management philosophy, and previous results.
- Evaluate your investment thesis. Is it still accurate? Is it still compelling? Is the discussion around valuation still relevant? Do you need to prepare content on business resilience given the crisis?
- Should I be holding virtual NDRs?
- With social distancing as the new normal, many are turning to virtual events as an alternate for in-person meetings. Virtual events and webcasts enable quick and effective communication with shareholders while providing the opportunity to reach potential investors who may not have been previously accessible.
- However, engaging an audience in a virtual environment and delivering a successful event is different from in-person. Take a look at some best practices to ensure your virtual NDR or event is engaging.
With no immediate end on the horizon, IROs need to adjust their strategies and tactics to address today’s new normal. While we can’t predict the impact this pandemic will have long-term, there are different ways to engage your stakeholders in the short-term. Check out our blog How to Engage Investors in the Wake of a Crisis for advice on messaging and connecting with investors.