It’s been a full year since the SEC released new Regulation Fair Disclosure guidance in regard to social media. Oversimplified, on April 3, 2013, the SEC stated that social media distribution is at legal disclosure par with the other distribution methods.
Needless to say, the new guidance has not created a watershed, transformational or disruptive event. The year has given us a few examples, both pro and con, of investor relations departments branching out in social media. That’s very good, because social media is how millions of people work and play online. Undeniable.
And that brings us back to the title of this blog: IR should not “engage” in social media. Obviously, the key word to focus on is engage. Its a great word for marketing, an excellent word for sales – but it is an unrealistic social media word for investor relations. It indicates interaction and dialog. As this survey shows, unrealistic.
IR should broadcast in social media. Get your news into the stream broadly and non-selectively. Especially StockTwits and Twitter. You don’t need to participate in any conversations, but you certainly should enable conversations amongst the Cashtaggers – the hipster name for investors who discuss stocks in StockTwits and Twitter. Let the Cashtaggers engage about your company.
Also, stop looking for IR social media ROI. IR won’t find any that fits into the current investor relations success metrics. Another suggestion is don’t expect to find your targeted institutional investors or analysts in the stream. Privacy and intellectual (trade) property is their DNA. Institutional investors and portfolio managers don’t file their SEC 13-Fs until the last possible moment… they sure as heck are not going to tweet “I’m long on $XYZ.” (BTW, the Carl Icahn “single tweet” example is a predatory marketing example, not a capital markets example)
End game: What is IR to do?
- Automate your press releases to distribute into StockTwits and Twitter. This automation mitigates RegFD risk.
- Always use your cashtag in your posts.
- Ask your PR team to use your cashtag in their posts.
- Unless you have important market moving news, don’t fill your brain with monitoring your cashtag. It will be meaningless and will make you dislike social media even more. Mostly, you’ll see quick bits from day traders.
- Don’t pepper your social media with personal quips or interesting articles. Social media is an SEC recognized disclosure channel and anything your post will be dissected by the SEC and predatory investors looking for hints. Set the precedent with investors “this is all news.”
That last point is a little gray, especially for small and microcaps. Social media could be used strategically as an important channel to Cashtaggers / day-traders, an important source of liquidity. Small and microcaps often fill the role of being their own “sell-side analysts,” but be wary – exactly as Yahoo Chat boards, these folks are not your friends, have zero interest in a relationship and are going to sell you at the first winning opportunity.
Social media is a mature media. By now, we all know what and where it excels and falters: that knowledge removes the risk. It is neither IR’s Holy Grail nor Black Plague: it is a distribution channel… a viable tile in the shareholder communications mosaic.
IR should broadcast in social media. Get your news into the stream broadly and non-selectively.
Have a great day.