Ticker Shock: Five Strategies That Move the Stock Price Needle


In the 7/25/2011 issue of PR News, we suggested that PR professionals must speak the language of the CEO to get a seat in the C-suite. Well, no two words resonate better with leadership within public companies than “stock price.” And moving the stock price needle is one act that can be closely correlated to PR activity. So PR pros must be all over stock price in executive meetings, right? Wrong. “I don’t think of doing PR to affect stock price,” says Lisa Rose, senior managing director at PR agency Dix & Eaton. “I make sure that stock price reflects its warranted values.”

Bob Ferris, executive managing director at RF Binder, agrees with Rose. In years past, he says, company performance was measured on stock price. A CEO would say, “How the heck can I make an acquisition if our stock is worth nothing? Let’s get some news out and boost the price.” But things have changed. “I try to dissuade clients from that strategy, because there are so many other variables today,” says Ferris.

But make no mistake: There are communications strategies that affect the stock ticker. After News Corp. hired Edelman in July to deal with its phone hacking crisis, its stock began to rise in tandem with an apology tour—who knows how strong the correlation of PR to stock price is (see the graphic on page 6 for details)?

Tried-and-true financial communications and investor relations tactics like thought leadership programs, speaker bureaus and relentless media relations can move the stock price needle. PR News asked financial comms/IR experts about other innovative, proven ways to lift stock price—some that might surprise and help you with a few ideas of your own.

Strategy 1: Integrated Reporting

An idea that took shape in Europe and is migrating to the U.S., integrated reporting involves creating a combination CSR/financial report. Surprisingly, studies have shown a link between these integrated documents and a lift in stock price. Southwest Airlines was a first adopter in integrated reporting after CEO Gary Kelly proposed streamlining its reporting back in 2008, says Marilee McInnis, communication manager at Southwest, who leads the report team. The company calls its Southwest One report the “One version of the truth,” says McInnis. The truth apparently pays dividends, as the report has garnered awards as well as accolades from Southwest investors, and was a subject of a Harvard Business Review case study. As for stock price, McInnis says she doesn’t really think about that much, concentrating more on adhering to Global Reporting Initiative (GRI) standards.

Strategy 2: Think Like Apple

Gene Marbach, group VP at Makovsky + Company, has 30 years of experience in financial communications and IR, but he’s never seen anything quite like Apple in its quest for tech domination and high valuation. A recent move by the company may be its most brilliant IR move ever, says Marbach: the plan to open an Apple Store in New York City’s Grand Central Station. “How many people pass through Grand Central a day, and how many are investment pros?” asks Marbach. The answer is—quite a few. Is there a stock price method to Apple’s madness? Marbach says yes. “Financial people will see the big crowds in the store, and it will reinforce Apple’s position as a tech leader,” says Marbach.

Marbach says this is a great example of how to play PR like an orchestra. “This is an angle I haven’t seen played anywhere,” he says. “The store will not only sell Apple product, but will sell Apple stock.”

Strategy 3: Shareholder Management

Knowing the shareholder base inside and out is critical to keeping stock prices stable, says Claire Koeneman, executive VP at Hill & Knowlton in Chicago. “Each shareholder looks at companies in specific ways,” says Koeneman, so companies must be cognizant of the composition and adjust messages accordingly. For example, there are “value investors” who look for opportunities to buy low and sell high. They are to be communicated to much differently than growth investors, who are in it for the long term. Koeneman cites Starbucks as a “growth company that switched to value.”

Strategy 4: Maintain IPO Euphoria

There is nothing like communications around an IPO that fantastically moves the stock price needle, says Ferris of RF Binder. “An IPO is where you can see an immediate uptick in stock price, and that is directly the result of PR efforts to ensure that the market, the investors and the public are all excited about the move,” says Ferris.

But it’s not just about that one day of ringing the New York Stock Exchange bell. Companies must maintain the euphoria through effective communications after the IPO, says Ferris, and do so without hyping the IPO stock price. Media relations plays a major part in that effort, particularly because of a dearth of brokerage analysts writing research reports. Instead, the press has become a source of investor information, says Ferris.

Strategy 5: Take to the Road

Dix & Eaton’s Rose says it’s imperative that communicators be able to answer the basic question from investors: “Why should I care about your stock?” To answer that question most effectively, Rose says a well-done road show can influence investors like no other tactic. “I have a client that does 24 investor conferences per year,” says Rose.

What’s critical to success on a scale such as that? Have a qualified pool of company spokespeople who know the right messages inside and out, she says. Make your story understandable, and allow your audience to connect the dots in terms of strategy. PRN

CONTACT:

Lisa Rose, lrose@dix-eaton.com; Bob Ferris, robert.ferris@rfbinder.com; Marilee McInnis, marilee.mcinnis@wnco.com; Gene Marbach, gmarbach@makovsky.com; Claire Koeneman, claire.koeneman@hillandknowlton.com.




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