Typically, if a company delivers on what it set out to do, it will build value and will be rewarded by shareholders. However, in a bear market, where volatility and turbulence reign supreme, this can often not be the case. Positive Phase II data or even a product approval can see a small uptick in share price and positive sentiment, but a few days later it was as if it hadn’t happened.
This can be beyond frustrating for management teams, who only months ago may have been riding high with future success in close reach, only to find that the exact same story is now seen as far too risky or yesterday’s news. That next round of financing can at best look a lot smaller, at worse not possible at all.
Faced with this pressure, management teams can be tempted to make grand gestures or overpromise in order to retain interest from investors. However tempting this may be, as the saying goes (that is reportedly behind why we call it a bear market), “don’t sell the bearskin before you’ve caught the bear.”
So how should you communicate?
- Stick to the plan
- Despite everything, the reason your company came into being and what investors backed you for in the first place was a sound idea supported by a well thought-out plan of execution. Don’t be tempted to change or adjust that radically. If the idea was a good idea before the down-turn, it is likely good still. Stay the course.
- Don’t stop communicating
- There is a temptation when your share price is in free fall to hunker down and stop communicating, but it’s now more than ever where clear engaged and proactive communications and investor relations are integral. You need to be able to give confidence to an existing investor that all is on track or attract new ones by demonstrating that your shares could provide a safe haven.
- Fundamentals, fundamentals, fundamentals
- Continued education of the market on the potential of your innovation over the long term and how you are de-risking it remains the priority, even in the face of sceptics or jittery investors.
The market will continue to ask, as it does in ALL markets: where will the value come from and when? How do we quantify success and why should we trust you? But in a Bear market add to this, how are you allocating your capital? What prudent cash control measures can you put in place to demonstrate careful consideration of the market but also demonstrate that the show will go on?
And as in point 2 – keep communicating against this clearly and openly.
- Accept that in a bear market good news can still bomb…
- It’s a harsh reality of the bear market that you can do everything right and still not reap the immediate reward. There are bigger forces at work and the savvy executive keeps their head down and takes it on the chin, knowing that over the long term they will be rewarded.
