Investor Conferences are an important part of any public company’s marketing and lead generation strategy. They offer opportunities to present your company story, make relevant connections, meet other CEOs, and generate investor interest. Conferences make a lot of sense as an integral part of any company’s visibility plan, but to make a meaningful impact you need to communicate your value metrics. The fastest way to do this is with an excellent presentation.
Having been the President & CEO of a public company for nearly 20 years and now an Executive Advisor to multiple companies, I’ve been on both sides of the presentation equation at conferences. For years, I was the presenter—as the President/CEO of I.D. Systems, I needed to communicate our company’s story, planned trajectory, and vision for the future. I now attend conferences either to create networking opportunities for my clients or as an interested potential investor, interacting with CEOs and viewing presentations while focusing on one critical element—the current value of the stock price and its future potential.
However, there is one critical problem that most CEOs have when it comes to gaining investor interest. It is an issue that affects CEOs and investors alike, and has a surprisingly simple solution.
Continue reading or click “play” to watch the video version
The Value Problem
The central issue of The Value Problem springs from companies’ inability to talk about their own stock performance.
I have noticed over time that many company presentations have one of two issues: they show exceptional market growth but provide no reason for investors to believe this will continue, or they have seen a decline in market value and do not address any solutions or explain the reasons why.
Value can be communicated in many ways, but investors are primarily interested in how the company will perform going forward. One of the most rational ways to measure this is by looking at how the market perceives the company’s stock. This is always a factor that impacts investor decisions about whether to buy. It goes without saying that the stockholder is buying the stock to make money.
CEOs are trained not to speak about stock fluctuations, though—and for good reason. Talking directly about stock price opens companies up to potential legal issues. By refusing to speak directly about company market value, CEOs are taking advantage of a legal safe harbor. This ensures that no one sues the company for providing misleading information.
However, investors still need to understand why a company’s stock is rising, plummeting, or remaining flat. As a result, the question arises, “how do investors get the information they need?”
In an informal survey of my large network of associates, I found that all experienced founders and CEOs share some form of training that mandates they avoid discussing stock prices. My network of investors expected this, and generally suggested that the best place to gain this information about stock value would be during the commonly held one-on-one meetings between CEOs and investors.
This creates a different but equally problematic situation in that it puts both parties at risk of creating information asymmetry, where investors become privy to information that the public doesn’t possess. It is dangerous because it can be considered insider trading—and with only two parties present, it has the possibility of becoming a legal he-said-she-said. This is a scenario to be avoided at all costs.
Overall, the situation presents a large problem that has yet to be addressed between CEOs and investors: CEOs cannot talk about stock prices, investors need this information, and the methods of gaining this information teeter on the edge of legality.
Provide Context to Build Trust
The way to fix The Value Problem is surprisingly simple—and is as easy as providing context for the circumstances surrounding market value.
I am not suggesting that CEOs should directly address stock prices or make projections to an audience during a presentation. Safe harbor provides guidelines that are actually beneficial for both parties in the long run. Continue to avoid making numerical predictions or trying to persuade your audience that the stock will reach a certain price by a given date.
Instead, explain what will be done in the future to drive growth. Doing so can create enough trust with potential investors to convince them that you have learned from any past mistakes. You can address hiccups in your company’s plans outright, then explain what caused any negative results. If you choose to do so, be sure to address what changes will be implemented to yield better results, and why you expect this will happen. Having an analytics database is especially beneficial here, because you can justify the company’s future trajectory based on real performance data. Likewise, if you’ve seen one or more years of stock growth, it is also important to couch this information in some context for investors to prove that your value will continue to climb.
For example, I recently attended a presentation at a conference where a manufacturer saw 300% growth in their stock price over a single year. However, with a lackluster presentation and no explanation of 1) how this was achieved or 2) how to continue these results in the future, many investors passed on the opportunity and chalked the situation up to either luck or short-term growth. There was no reason for the company’s audience to believe it would continue its upward climb, so no one wanted to purchase the stock at an all-time high.
Had the CEO addressed this trend during the presentation and convinced the audience of future potential, this company’s stock would be far less likely to stagnate or decrease in value going forward.
While the nuance of providing context for your company’s growth—or lack thereof— may require some work, the benefits of tactfully doing so are too important to pass up.
When you address market growth head-on (even subtly) you gain a type of home-court advantage. This will help you prevent the possibility that investors will build their own negative narratives, assume the worst, and decide not to buy.
It is also an excellent opportunity to showcase company values and your own innovative thinking. Investors will trust a mature CEO who identifies and fixes problems. This shows strength of character and the foresight required to build that trust. It will help persuade individuals that you will take care of their investments and run the company with clarity of thought and strategic leadership.
Don’t pass on the opportunity to tell a story that sells your company’s vision. But keep in mind, from an investor standpoint, they need context for the current stock price. Where and how does the current stock price fit into the future? Try to use this tool during your next presentation to provide an understanding that investors need in order to have confidence in your company.
For help navigating how to contextualize your business growth or decline in a way that appeals to investors, feel free to contact me at email@example.com.
Disclaimer: not to be confused with legal counsel. All opinions are based on observation gathered during the 25+ years served as founder and CEO of IDSY, as well as Executive Advisor to companies serving the Logistics, IoT, Supply Chain, and Transportation industries. Please seek official legal advice from a licensed expert.
For more like this, subscribe below for my Ehrman LIST, where I bring you essential content, insights, and information regarding Logistics, IoT, Supply Chain, & Transportation. Always be in-the-know, with regular updates that provide the best tools to keep your company’s solutions on the cutting edge.
If you haven’t already, be sure to download your copy of my industry brief, “It’s the Best of Times and the Worst of Times for the Internet of Things” while it’s still available!