Investor relations: Adapting to the COVID-19 next normal

Introduction

The COVID-19 crisis is unsettling for many reasons, not the least of which is the mountain of uncertainty about health and well-being.

A similar level of uncertainty is also affecting the financial markets, creating economic anxiety and driving extraordinary volatility. For CFOs and investor relations (IR) professionals, effectively communicating at this time of COVID-19—and responding to the demands of multiple stakeholders—can be challenging, to say the least.

For example, investors, portfolio managers, and analysts are likely asking for details about the virus’s impact on a company’s business, including the effects on revenue generation and profitability, as well as the magnitude and duration of the impact on overall financial health. These stakeholders also likely want information on management’s activation triggers for accelerating plans or taking a foot off the gas. For instance, they may want to know whether dropping below a certain key performance indicator (KPI) threshold would prompt the company to defer capital investment, or, in extreme cases, slow production or furlough workers. Also top of mind for investors is whether the company’s capacity or confidence to pay dividends or repurchase shares will be affected by the COVID-19-related disruption.

In this environment, organizations can help mitigate ambiguity that erodes value by demonstrating to the investment community that leaders have an adaptive strategy and a plan to execute on it. Moreover, regardless of the IR challenges companies face, there are several immediate and long-term steps organizations can take to help manage uncertainty during this pandemic. And in this issue of CFO Insights, we will discuss some of those steps as they related to guidance and future communications.

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