This year has been a challenging and unexpected experience for Investor Relations professionals as a result of the pandemic. U.S. stock markets ended their longest bull market in history. The DOW recorded its worst first quarter ever amid coronavirus fears. And for the first time since the Great Depression, the emergency brake was pulled to slow a stock market crash.
According to a recent analysis, volatility levels today rival or surpass those last seen in October 1987 and December 2008 and, before that, in late 1929 and the early 1930s, suggesting that, compared with other outbreaks, COVID-19 is having an unprecedented impact on markets.
IROs have had to manage through incredible volatility and uncertainty just as their companies confronted difficult decisions around layoffs and cost reductions. But in the face of these challenges, IR has emerged as critical to a company’s ability to weather this storm. And while the role will remain essential post-pandemic, it won’t be without notable changes.
IROs see more action
Even as many employers laid off or furloughed significant portions of their teams, the role of the IRO intensified with the onset of the pandemic. According to NIRI’s recently released COVID-19 Impact Survey, the majority (71.1%) of the members surveyed said their average daily workload had increased significantly or moderately since the start of the pandemic.
A big portion of that workload was managing communications, as more than half (53.1%) of corporate IR and counselor respondents reported an increase in investor/analyst requests for calls/meetings with C-suite executives, as compared with the same period in 2019.
Restrictions drive the adoption of a new approach
As we’re all aware, meetings between investors, shareholders, and company leadership previously held in-person have had to be done remotely as the pandemic closed borders introduced the world to social distancing. This drove a sharp increase in the adoption of technology as IROs looked for innovative ways to stay connected and engaged with investors and key stakeholders.
IR Magazine recently reported that nine in 10 IROs say the virus outbreak has increased their interest in virtual IR activities for the next 12 months. While global shutdowns forced IROs to quickly adopt and adapt to a new format, the benefits of this approach, including significant cost and time savings, have compelled most to incorporate it into their long-term strategy.
This trend will likely continue to grow in the future as IROs look ahead to NDRs and conferences. The same IR Magazine study reports that the vast majority (97%) of respondents say the pandemic has changed their current IR program plans, including non-deal roadshows and conferences, for the next 12 months.
Activism concerns on the rise
Beyond virtual meetings, IROs can leverage technology to provide better insights on their shareholder activities. A big concern in recent weeks has been becoming the next target of an activism campaign. Ten percent of IR Magazine survey respondents said they had noticed an increase in share purchases by hedge funds or other activists during the pandemic, while another 20% said they were unsure but believed that was happening. These information and resulting concerns make insight into the company’s stock activity and shareholder base essential.
Surveillance reveals changes and patterns within a shareholder base that were previously inaccessible. Weaving together robust and diverse intelligence sources can provide IR teams with a more complete view of their stock, including present and potential future investor sentiment. Valuable on many levels, this intelligence can help identify potential activist hedge funds getting into the stock. Armed with this information, teams can take proactive steps to get in front of these issues and mitigate damage, further demonstrating the value of the IR role.
Highlighting the value of the IR role
And speaking of the value of the role, more than a third of corporate IR practitioner respondents (36.4%) said the pandemic had elevated their professional stature, or the importance of the IR team, within their companies. Volatile and uncertain markets can showcase the significance of the IR function, but you need to continue to provide value while managing an increased workload, in order to maintain that seat at the table.
Leveraging innovative solutions designed to help deliver on all aspects of your role can empower continued success. Whether alerting you to suspicious stock movement, enabling more efficient investor targeting and engagement, or just automating manual tasks to give you more time in the day, look for solutions that can help you and your management team understand, attract, and engage with investors. To learn more about navigating the new normal, check out our blog on target today’s investors.
