One of the most critical aspects of being able to effectively communicate with Wall Street is to understand how it views you, your company, and your story. A solid understanding of the lens through which you are viewed can give you the foundation to develop a strategic communication plan. Unfortunately, Wall Street doesn’t sit down as a group to develop a single view on your company — each sell-side analyst and investor develops his or her own unique opinion that is influenced by a wide variety of factors.
So, how do you go about getting up to speed on how Wall Street views your story? One option is to conduct a perception study or audit.
Perception studies are a highly valuable and often under-utilized tool you can use to collect a range of first-hand information from key Wall Street constituents, including covering and non-covering sell-side analysts, current investors, former investors, and on-the-fence investors. Once you’ve completed a perception audit, you will have a significant amount of data and feedback at your fingertips. Now what?
Below are five ways you can implement the results of a perception study:
- Overhaul the significant points of your story. Based on the perception study, you may identify a significant disconnect between how you view your business and how it is understood by analysts and investors. In this case, there may be a need to go back to the drawing board and overhaul your story. Start from scratch and build out the significant points of your story at high level, then develop content to emphasize the key aspects. While it can be uncomfortable to diverge from the story you are used to telling, it may be necessary to the long-term success of your stock.
- Assess how you report your business. Use the feedback from the perception study to critically evaluate how you are reporting on your business during quarterly earnings releases — both in terms of the quantitative metrics you provide and how you talk about your performance and strategy. Are there more appropriate operating metrics you can provide that would give Wall Street a clearer, more predictable way to model your business? Should you spend a few extra minutes digging into your long-term strategy to ensure investors understand what you think your company will look like 12-24 months from now?
- Identify what Wall Street views as sources of value creation. Perception audits can be a great source of information and ideas, particularly when a large number of smart, well-informed Wall Street-ers provide their thoughts on what would help unlock value and drive stock performance. While you will probably hear suggestions that are equal parts obvious and unachievable, you are also likely to get a lot of cogent opinions on what they and other investors would view as smart strategic moves or key milestones for your business. These ideas can be used to help stress-test and/or validate your long-term strategy, which can then inform how you communicate that strategy.
- Tweak the finer points of your messaging. You will often hear back from perception studies that there are certain parts of your story that various audiences don’t understand or find confusing. Take the time to ensure all critical aspects of your story are laid out in an effective, digestible manner. Eliminating any barriers to understanding will make it more likely that investors will dig in further.
- Rethink your IR calendar. Use feedback from a perception study to analyze your current IR calendar and determine if there is a more effective use of your time. Depending on the feedback, you should think strategically about your use of conferences (both investor and industry), non-deal road shows, and investor days to get your story in front of the most appropriate audiences at the most impactful time.
Have questions about conducting a perception audit or implementing changes based on the feedback you receive? To learn how Westwicke, an ICR company, can help guide you to success with the investment community, get in touch.