Elevate Investor Engagement: Going Beyond the RNS
As we usher in the new year, we’re calling on all listed companies to re-evaluate their approach to communicating with individual investors.
We’re challenging them to go beyond regulatory necessities, to be brave and explore new avenues of connection that mutually benefit both the business and the investor.
Exploring the Essence of Investor Engagement
Engaging with investors should not be a checkbox activity; it serves as the linchpin for maintaining a steady and informed valuation. Effective engagement establishes a robust, knowledgeable shareholder base with a genuine understanding of the company’s valuation. Such a shareholder base tends to be less volatile, motivated to retain their positions for the long term – the ideal investors!
In the past, companies could sustain this level of engagement by delivering only the communications mandated by law. However, times have changed, requiring companies to work harder to keep their retail investors on board.
To reap the benefits of effective engagement, companies must understand their audience and adopt a dynamic approach to not only inform them but transform them into advocates. Retail investors, with varying levels of financial literacy, often rely on external sources such as mainstream media, broker stock tips, and social media for investment advice – with the current landscape being filled with ‘noise,’ and groups harbouring competing agendas, all vying for investors’ attention presents a degree of danger.
Social media, in particular, is a realm of conflicting information and hype, often devoid of due diligence, as evidenced by events like GameStop and the rise of crypto.
It’s imperative that companies don’t allow third parties to hijack their narrative. Proactive, regular, and clear communication is the key, allowing companies to take ownership of their message and craft their own story.
Adapting to the Speed of Culture
Understanding how investors consume and navigate information necessitates listed companies to set aside traditional approaches and engage at the pace and manner investors are used to. Opinions, concerns, and expectations are moulded and reshaped instantaneously by social media, demanding that companies become a robust and trustworthy voice capable of reacting promptly.
Monitoring conversations, communicating, and engaging on platforms frequented by investors (beyond RNS!), such as X (Twitter) and Telegram, enables companies to establish themselves as a source of truth and build connections with investors.
Overcoming Apprehension and Embracing Transparency
Traditionally, boards have been cautious, guided by the fear of regulatory backlash and inclined to divulge minimal information. However, in the current landscape, under-communication gives power to third parties and generates ambiguity. Any lack of information or ambiguity can lead investors to be skittish, causing short-term price movements. Without clear and regular communication, attention is quickly diverted from a company’s underlying valuation by speculation and hype.
ECR Minerals provides a great example for how to do direct communication well, they use X to transparently communicate with investors as real people, offering clear, regular, two-way engagement opportunities.
#ECR Christmas Broadcast to shareholders and investors
The ECR team would like to wish everyone a Merry Christmas and a Happy New Year! pic.twitter.com/6OdOzgBfSy
— ecrminerals (@ecrminerals) December 24, 2023
Recognising the Value of Two-Way Communication
While regular, formal announcements remain imperative, a parallel, human, social media presence is equally important. Encouraging companies to overcome their reluctance toward social media and embrace its unique potential to be flexible, spontaneous, and conversational is crucial.
A dynamic social media strategy empowers companies to address misinformation, counteract untruths, offer additional explanations for the less financially literate, and foster clarity. Additionally, encouraging questions and enabling investors to seek more from their holdings facilitates mutual learning. Investors become better informed, capable of making more educated decisions, while businesses cultivate advocates and demonstrate a commitment to transparency.
To revolutionise corporate engagement with individual investors and reap the rewards brought by an engaged and informed investor base, companies need to be brave!
They must step outside the comfort zone provided by the RNS. Legal communication requirements need not be seen as restrictive; there’s ample room to communicate with investors on their platforms, in a manner that resonates with them. Maintaining stable valuations demands that companies take control of their own narrative and communicate more frequently and effectively than others might wish for.
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