When the School Is Running It’s Time To Cast The Nets. As investors cash out, companies need to be ready.
Turmoil is scary to market people. That’s why stocks are volatile. They’ve been blowing their tops and sinking through floors since forever (especially in small caps) and will likely continue to do so for as long as they’re locked in an unholy feedback loop with human emotions.
There is an adage that, as markets crash, companies ought to keep their heads down and stay off of investors’ radars. Give investors a reason to sell, the reasoning goes, and they will. It’s better to wait the storm out than to push a news release that gets a seller’s attention, inviting them to unload.
This is mostly wrong, but it’s easy to see why the myth persists. Nobody wants to wake up on the day that a big release is planned and see the market falling apart. If an announcement about a significant company milestone is due to get buried in a market meltdown, delaying it a day isn’t a mistake. It’s the myth that a company ought to hold all communication until the market gets a handle on itself that we take issue with.
For starters, nobody knows when the market is going to find its feet. Everyone is looking at each other and investors are looking at companies to see how they’re going to carry it. Silence is a sure sign of weakness; a sign that the company can’t quite handle the volatility. Anyone who’s making assessments before they sell (as opposed to just selling everything) is more likely to sell a quiet company showing no action than they are to sell one who’s vigilantly running a business and executing the plan, market be damned.
Stopping sellers isn’t a good strategy on any day, especially not a day when selling is all anyone wants to do. The trick of it is to find buyers to soak up all of that sell volume, and find more after that. Luckily, when the market sells off, people are in cash and that cash will likely make its way back into the market. It will be the IR departments that made sure they stood out who will be considered first.
Ultimately, interested investors will be interested. It’s up to companies to show the market that they are active, engaged, knowledgeable about their sector and their company’s place in it.
So create content. We’ve shown time and time again that it isn’t a complicated formula. Give investors content and they will read it. More content equates to both a broader and deeper familiarity with a company’s story. The distribution and targeting of that content is important, and we can help you with that, but it has to be created first. Companies should be writing blog posts. They should be making infographics and writing letters to shareholders. Show the market that this is a focused company; one with purpose and resolve.