Telling an investment story is rarely simple. These days it is more complicated and tougher than ever, amidst the geopolitical rhetoric and actions dominating the global financial markets.
Company performance seems to be taking a backseat, as the escalating threat of a global trade war unfolds, fueling massive levels of market volatility and emotional angst.
The current environment poses extreme challenges for companies to communicate effectively. Investor attention is shifting to macro risks. Companies are struggling to gain traction with their narratives, leaving even well-executed strategies overshadowed by uncertainty and fear.
While there is no quick fix, CEOs and CFOs still can project confidence by showing that their organizations are ready to face adversity head-on. Following are eight strategies public companies can follow to help reassure investors and other stakeholders during times of uncertainty, even without having all the answers.
Focus on the company’s long-term value proposition. Emphasize core strengths, such as brand durability, a solid balance sheet, diversified customer base and strong pipeline. Acknowledge that more external challenges than normal exist, but keep the spotlight on what makes the company resilient and built for the long haul.
Consider withdrawing or tempering earnings guidance. For companies vulnerable to tariff-related exposure, stepping back on the financial outlook might be the best way forward. Many companies in just about every sector either have pulled or qualified their earnings guidance, at least temporarily. Investors and analysts readily understand their rationale for doing so. Corporations today face heightened risk from supply chain disruptions and shifts in spending, making reliable forecasts difficult. Investors know that estimates are uncertain in volatile times. Withdrawing guidance temporarily could be a wise choice, rather than missing guidance.
Include real-time insights in the narrative. Anecdotes from sales teams, suppliers and customers offer investors a timely snapshot of emerging trends. Are customers holding off on purchases, building inventory, pausing investments or freezing hiring? Have there been any noticeable shifts in customer behavior? In an environment full of unknowns, analysts and investors will appreciate the boots-on-the-ground perspectives.
Communicate as often and as transparently as possible. Engage investors between earnings cycles. Consider publishing a Q&A/FAQ document relative to “The Current Uncertain Environment” on the IR website, especially for companies that face direct tariff risks. Summarize recent call questions and outline responses, reinforcing management’s message about long-term value and strategy. Even if the risks never materialize, showing preparedness will boost investor confidence.
Keep a close eye on competitors. Monitoring competitors is always essential, but especially when the whole sector is in the same boat and facing identical challenges. Some might be more exposed than others. As Warren Buffet famously quipped, “You don’t find out who’s been swimming naked until the tide goes out.” Extending the metaphor, “Those wearing the proper swim gear will stand out as truly prepared.” Investors and analysts will see who is ready and will benchmark the company’s strategy for navigating immediate challenges with its peers.
Highlight potential opportunities. Address any positioning that might benefit from tariffs, such as geographic, regulatory, operational or sector-specific tailwinds. Frame these discussions as informed speculation, noting the uncertainty. If the opportunities aren’t immediately evident, emphasize management’s track record of navigating macroeconomic uncertainty. Many companies gained valuable experience during the 2020 supply chain disruptions due to Covid-19 and its aftermath. Drawing on that understanding could be valuable in helping to build investor confidence.
Contact former shareholders. Uncertainty brings volatility, and clarity can smooth it out. Reconnect with former shareholders who exited in previous quarters with good returns. Reinforce that the fundamental investment story remains intact. Let them see the potential to re-enter while the stock is undervalued due to factors outside the company’s control.
Don’t overlook employees. Many are shareholders with both financial and emotional stakes. Sharp movements in share prices can be unsettling. Employees are not professional investors and may not be aware of the market forces at play. Address the macro challenges, but focus on the company’s vision, its accomplishments and what the team can control. Near-term uncertainty is a “bump in the road” that the team will navigate together.
While investors crave clarity, there is no way to provide it when irrationality dominates the headlines. It is during these times that management should project confidence and demonstrate readiness to handle the uncertainty and emerge even stronger.
Michael Wichman, mwichman@pondel.com
