STOCK VALUATION
The endgame of investor relations is a stock price that reflects a company's true value as measured by a combination of factors that can include performance, management strength, and fundamentals of the business.Factors that cannot be controlled include the market environment, competition, and whether or not the company’s industry is in favor.
The function of an effective IR program is to find a receptive audience of investors and analysts for a company’s story and communicate with them consistently and convincingly so that over time we create a constituency for the company’s stock.
In an IR program, information becomes the key currency. Thus, a company willing to lay out its strategies in detail stands a better chance of achieving fair value. Quality of information becomes the critical element of a company’s effectiveness at enabling the market to fairly price its stock. And because the market is inefficient, particularly for small-cap companies, it means they have to work harder to gain market recognition, which is exactly what an IR program is designed to achieve.
The tools to provide information fall into three categories:
- Printed materials
- SEC filings, press releases, annual reports, corporate profiles, fact sheets
- Oral communications
- Meetings, conference calls, telephone contact, industry conference presentations
- Electronic communications
- The company's website, blast e-mails, financial search engines