Learn 4 Ways to Re-engage Fundamental Investors
For the last several months, crisis communication has been the name of the game. We’ve urged companies to overcommunicate with the Street, keep the focus on near-term issues, and emphasize the organization’s ability to withstand the downturn. While we’re not out of the woods, yet, the wild volatility in the market has started to subside. Many businesses and states are re-opening. And most investors believe calendar Q2 is the trough.
As a result, we’re seeing two key shifts that have big implications for your investment narrative:
- First, many companies are starting to gain a greater degree of visibility, at least in the medium term, that should continue to sharpen over the next six weeks as we move into calendar Q2 earnings prep.
- Second, companies are beginning to see more robust and higher quality schedules at virtual NDRs and conferences as fundamental investors regain confidence and actively seek out the best opportunities to double down on existing investments or find new investments that can help them regain their portfolios.
To capitalize on the comeback, transition your investment narrative to balance crisis communication with your intermediate-term story.
If your business is starting to see the haze lift, it’s the ideal time to update your investment story and capture the attention of investors who are looking to re-engage. While it’s still too early for most companies to speak definitively about the long term, the key right now is to pepper in what you can about the medium term and communicate why your business is the right bet going forward.
Here are four ideas for updating your messaging for the current environment:
- Share the results of your crisis efforts. For weeks, you’ve been touting your organization’s liquidity, cost-cutting prowess, and other recession-proof traits. This story still matters. Remember that even investors who are ready to seize opportunities are still wary. They need to know your business remains committed to mitigating risk even as you restart production and work to get back on track. You can supplement your messages with details on how your efforts have fared so far. For example, how much of your cost-cutting actions were structural versus temporary? Highlight your successes navigating the current situation and talk about where your business currently stands. Note, if your business continues to lack much or any clarity around its impending recovery, this is where you will need to continue actively messaging for now as you wait for the next several weeks to shed more light.
- Make the case for why your business is going to emerge stronger than ever. You’ve no doubt learned a lot about your organization’s resiliency over the past several months. Discuss the changes you’ve made to fortify your business for the future. Especially highlight any cost reductions that are structural versus temporary and that will positively enhance your profitability going forward. Given that many experts expect coronavirus cases to surge again in the fall, it’s important to show that you have specific strategies in place to safeguard against future crises.
- Illustrate your immediate-term trajectory and plans for re-investment in growth. Now more than ever, investors are looking for companies that are poised to take off. If you can, paint a picture of what your path forward looks like coming out of the downturn. Talk specifically about re-investment plans for the back half of 2020 and give as many details as you can: will new growth be organic or inorganic? Do you have plans for new product lines? Will growth be slow at first with plans to ramp up rapidly? Help investors understand the opportunity in the intermediate term and how you plan to capitalize upon it going forward.
- Think ahead to the longer term. Right now, most companies lack the clarity to speak beyond the end of 2020 with much authority, and investors understand that. However, you can speak to how your overall strategy or specific initiatives position your business for success into 2021 and beyond, or how they may need to change going forward as events continue to unfold and the impact of COVID-19 on the economy and consumer continues to be better understood.
Get ready to put calendar Q2 in the rearview mirror.
No one expects calendar Q2 to be pretty. But many fundamental investors are ready to move ahead, and it’s time to update your investment narrative to capture their attention. While some degree of uncertainty will persist in the second half of the year and risk mitigation messaging will remain important, the time is now to start talking about what business looks like in a post-COVID world.
Further, calendar Q2 can be a jumping off point for a refined narrative as we move into fall NDRs, conferences and Investors Days, virtual or otherwise. In particular, virtual Investor Days offer a tremendous opportunity for your business to carry out its 2020 investor relations program, connect with the Street, and share updates with both current and potential investors in what is a crucial time for investor communication.
For more ideas or help transitioning your investment narrative or re-engaging in a virtual world, give us a call.