Investor Relations for Bear Markets

For more than half a century, PLR has been committed to the art of investor relations and shareholder communications.

We craft informative releases that convey clients’ key messages with authority and clarity, and we distribute them to a unique distribution list we build and maintain for each client. We arrange media placements on behalf of our clients, including “print” interviews, podcasts and video interviews with management. After more than five decades in the Investor Relations business and having lived through a number of bull and bear markets, I am often asked, “how should I spend my PR-IR budget in response to varying market conditions?” My response never varies: “be aggressive in bringing your company’s story to the investment community.”

That said, any IR program must be credible, flexible and responsive enough to adjust to current market conditions. Above all, a company should communicate and educate the market regardless of market conditions. This includes consistent distribution of press releases, which Wall Street will appreciate immensely – transparency is your best strategy and communicating significant corporate events and milestones will build your credibility.

In down markets, you need to keep investors informed so they can make decisions based on meaningful news; the same releases should of course be provided to shareholders. In both instances, research has shown individual investors, particularly retail, have the power to affect trading volume and share price.

Our philosophy has always been that an educated investor and/or shareholder will more than likely hold onto his position if he or she is kept informed. It is especially important to maintain consistent communication during bear markets, so as to demonstrate your responsiveness to adverse conditions and to burnish your credibility. Today, thanks to the Web, there are myriad sources of up-to-the minute corporate and trading information – buy and/ or sell decisions often hinge on the full and timely disclosure of important corporate developments to regulatory agencies.

It’s beneficial for any company to learn not to make the mistake many companies make during down markets: by cutting budgets and taking a “passive” approach to your communications, this lack of information, especially from a small- or mid-cap stock, will cause selling. This is because the market can absorb good news and bad news, but a lack of news inspires selling, which results in a lower share price, and we can show you far too many examples of this phenomenon over the past half-century of market cycles.

In 90 percent of cases, companies that slash their investor relations budgets during down markets see a reduction in share price and a significant loss of value. We have always advised our clients to focus on performance; they are usually successful when they do, but as soon as they find themselves in a bear market, they forget the importance of this metric and, instead of staying a successful course, they try to “disappear.” Time and again it’s an unwise decision, especially today, when the slightest tremor in the market is trending on social media before the ground, barely moving before the tremor, stops moving.

Don’t stop communicating in a bear market. The best thing you can do is work with an opportunistic IR agency that will help you remain consistent and transparent with your audience – one that will help you develop and implement a communications program and help you stay with it throughout down markets. There are many opportunities every quarter to reach out to shareholders and potential investors; you have a website, social media, podcast opportunities, byline opportunities…you can even shoot quality video of your corporate presentation, or host video conferences, so the market sees you continue to execute regardless of market turbulence. Whatever you do, you will drive more traffic to your site and increase your following.

A bear market is the perfect time to meet face to face with Wall Street, both your current shareholders and potential investors, who will hopefully gain confidence after meeting – hopefully, the former will enlarge their positions while the latter will be convinced of the merit of your story and begin building positions in the stock. Zoom, MS Teams and similar applications are excellent tools for virtual meetings and immensely cost effective for your company, as are national investment conferences and trade shows. It is our experience that these sorts of activities always inspire new investment in a company while giving management the chance to interact with existing investors.

A consistent communications program will always be beneficial to a company, regardless of the vagaries of the market – the mistake is to reduce your communication with investors during a down market. This is the perfect time to ramp up your efforts and bring your story far and wide.

For more information about Porter, LeVay & Rose, please visit: www.plrinvest.com