What happens on social media does not stay on social media. Single Tweets and community conversations impact the real world—from influencing what film gets honored at the Oscars, to causing a 2500% increase in app downloads. But its ability to influence markets is what makes social media for investor relations so crucial.
The impact of social media on the world is here to stay. Investor relations leaders have an opportunity to reshape their engagement strategy to harness this powerful communications channel. From the path to the public market, to publishing investor messaging and understanding perception, let’s explore how social media can enhance investor relations strategies.
The benefits of using social media for investor relations
According to recent data, 75% of investors now use social media to inform investment decisions. The role of investor relations is changing—and requires collaboration with more internal stakeholders than ever before.
“Social media has become a key platform for investor relations professionals to gauge important conversations around their company and the broader market,” Sprout Social’s Corporate Communications Strategist Abigail Schmitt tells us. “Particularly in recent years, platforms like Reddit and Twitter have become popular destinations for retail and institutional investors to discuss and analyze market trends.”
From an education and connection standpoint, it is critical to ensure that the right content, facts and investor messaging come directly from the company for investors to find on social. Investors large and small are increasingly using social to research new investment ideas—on TikTok alone, the #stocks topic has amassed 5.2 billion views. And Business Insider reports that membership on the subreddit r/FinancialPlanning saw 87% growth between June 2020 and June 2021.
IR departments have an opportunity to reduce friction from this process and empower decision making with a proactive social content strategy.
“Dating back just ten years ago, investor presentations, facts and investment information was gated to the world’s largest institutional money managers. This information is now democratized on social to empower all investors to make the best possible decisions with the most relevant information,” says Sprout Social’s Head of Investor Relations and Corporate Development Jason Rechel. “At the same time, IR leaders now understand the power that a group of vocal investors on social can have on an individual stock price.”
Social also has billions of data points that can be harnessed in real time to help keep IR leaders informed about corporate brand health, employer brand health, competitive changes, consumer product sentiment, investor sentiment and more. Harnessed in the right way, this information can help senior management stay in front of potential crises and manage investor Q&A appropriately.
Now that you know the why, here’s how you can use social media to empower your investor relations team and strategy.
Connect with future investors and find your influencers
The pandemic spurred a new wave of retail investors. A Charles Schwab survey revealed that 15% of current retail investors started investing in 2020. And members of Gen Z are more invested in the stock market than financial assets—including cryptocurrency.
Social media has made investment education more accessible. Financial influencers on “Stock Tok” amass thousands of followers. And in a new survey, 41% of 18-24 year old investors said they turn to social media platforms like Reddit, Instagram and TikTok to learn.
“For IR leaders, it is table stakes to have a social media strategy,” Jason tells us. “Understanding that your audience now actively seeks out investment information on social means that IR leaders need to proactively meet this audience on social with relevant financial information, KPIs and messaging to democratize the investment process.”
If you’re not in the same channel as future investors, you’re missing the chance to connect with a new audience. Use social media to listen to the conversations your future investors may be having, understand what motivates them and to see what content resonates with them.
Monitor conversations and sentiment
Imagine being able to get wind of market volatility months before it comes to a head. It doesn’t take psychic powers—using social listening can help you stay informed about developments and new importation on social, which can happen months before impacting a stock price.
When GameStop’s stocks infamously skyrocketed in early 2021, Nasdaq used social media to match conversations with unusual trading activity. This is social listening in action—tuning into digital conversations to understand what’s being said about a topic and how people feel about it.
“We definitely have seen a significant increase in retail participation in the market throughout the year,” says @adenatfriedman. “We do have technology that evaluates social media chatter…and match that up against unusual trading activity–we will potentially halt that stock.” pic.twitter.com/UWvg53YFI6
— Squawk Box (@SquawkCNBC) January 27, 2021
Given the ever-changing nature of the market, listening empowers you to see conversations and sentiment that may impact your company and its stock so you can move with the market and form proactive responses.
“IR leaders can use tools like social listening to maintain a constant pulse on external events and investor sentiment that might impact the fundamentals of the business or corporate brand,” Jason tells us. “Using social listening is an incredibly powerful tool to stay in front of what might be rapidly changing business or market conditions.”
To use social listening effectively, a tool is essential. Sprout Social’s Listening tool can analyze conversations across social media platforms and the web to give you a 360-degree view of the topics that matter most to you and your investors.
Anticipate investor questions
Being an investor relations leader without using social media is a lot like leading a book club without actually reading the book—you’re less informed than everyone else in the room.
When building trust with investors, the last thing you want is to be unprepared to answer their questions.
As Jason puts it, “Social is rapidly becoming where many investors go first for company news and information.”
With more retail and institutional investors using social to learn about stocks, it’s crucial for you to be in the same space. Knowing what resources your investors are consuming can better inform and prepare you for questions they might have.
Pro tip: Social listening can empower you here, too. Using social listening levels the playing field, expanding your knowledge base and giving you access to the same information retail and institutional investors see.
Tips for mastering social media for investor relations
Now that you know how powerful social media can be, here are a few actionable ways you can make it an integral part of your investor relations strategy.
Tap into your teams
Tapping into social media for your investor relations strategy requires collaboration. Here at Sprout, we have a regular strategy meeting between our Investor Relations, PR, Corporate Communications, Social Media and Legal teams.
Work across teams to create your strategy, align your messaging and ensure content on social follows SEC guidelines. You want people to see the same, consistent tone and message—regardless of where your brand shows up.
“We strive for consistency of message, consistency of content and timeliness and legality of content to ensure that all of our stakeholders receive the most relevant news at the most appropriate time,” Jason tells us. “Social is a key channel in this effort, and we plan content accordingly to keep our audience engaged.”
Work together to incorporate input from your communications teams around the most important events for your investor audience, like earnings. Are you hitting the right buttons in your messages? How do your posts perform?
As Abigail puts it, “Collaborating with the teams who already understand the social landscape can help you develop a plan that will best complement your ongoing IR strategy and your brand. This may mean developing an IR presence for your company on social, or it may mean simply using social media to gauge sentiment before large events or announcements.”
You can even work with the social team to amplify messages on your brand’s channels by turning sound bites from earnings calls into shareable messages on your brand channels.
Choose your channels
While it’s not a requirement, having your own channels for investor relations communications enables you to connect directly with your investors and the media. It ultimately comes down to whether you have the bandwidth.
If you do want dedicated channels, the next step is to decide which social platforms to use. Here are a few to consider and why they might be beneficial to you.
As a news-friendly platform, Twitter is a top choice for companies like Ford, CVS and Sprout to host their investor relations channels.
Twitter also makes it easy for investors to find information about your stock, and for you to find conversations about it with $cashtags. A $cashtag is similar to a hashtag in that it directs people to relevant conversations, but it’s hyper-specific to your brand and stock. Create your $cashtag by putting a dollar sign in front of your ticker symbol. For example, Sprout’s is $SPT.
Reddit is the home of many financial communities that have grown in popularity during the pandemic.
Use Reddit to share company updates that the Reddit financial communities can engage with and to monitor conversations around your company. As one of the platforms that Sprout’s Listening tools pull conversations from, it’s also valuable for gathering insights about your company and competitors.
LinkedIn is an important platform for your business to share content illustrating your successes, growth and news. With social media playing more of a role in institutional investors’ primary research methods, give your company’s LinkedIn Page an audit to make sure it’s up to date.
Embrace social listening
From understanding sentiment around your stock to identifying potential market volatility, here are a few ways social media listening can help your strategy.
Track fluctuations in conversations
When GameStop’s stock exploded in 2021, conversations mentioning the company and r/WallStreeetBets increased 2,805% over the course of a week—not overnight.
Using social listening, you can identify spikes—or dips—in conversations and what might be contributing to them to get ahead of potential crises.
Changes in how people feel about your brand and stock can reveal larger underlying issues. This can help you understand what’s going on in the marketplace and can help you make better internal predictions about your stock.
Connect to your audience
If you only look at posts you’re tagged in, you’re missing out on a huge part of the conversation. When you use a tool like Sprout that scours social for keywords, you can find comments and questions about your brand and stock even when you’re not tagged.
Keep an eye on competitor news
How does the conversation around other company stocks compare to yours? Tracking chatter and sentiment about your competition can alert you to industry changes that could affect your market standing.
Be smart about your content
Almost half of people will unfollow a brand for irrelevant content. Tier your content to your audience.
For example, the topic of K-pop music alone wouldn’t make sense for Twitter’s investor relations channels and website. However, a blog post about K-pop Tweet volume reaching new highs demonstrates the platform’s global reach and popularity—all of which could inspire investors.
When it comes to social media for investor relations, ask yourself what matters to an audience of investors.
Here are a few types of content that work well for investor relations-specific channels.
- Announce relevant events (e.g., quarterly earnings calls)
- Quotes or thought leadership highlights from investor events and earnings calls
- Company, customer or acquisition news
- Performance-related thought leadership
- Company press
- Company and employee successes and celebrations
- Shares of relevant and exciting use cases, mentions and more
Bet on social media for investor relations
In recent years, we’ve seen the rise of stocks influenced by conversations in online spaces.
Retail investors saved Hertz from bankruptcy in 2020 after bidding up shares 825%.
AMC narrowly avoided filing for bankruptcy after investors on Reddit provided them with capital.
Social media has fundamentally changed the financial world. It can—and should—change how you work. You don’t need to be a social media pro to tap into social insights. You just need the right tools, the right team collaboration and the right goals.
Use our template to create a social listening map and get ready to change the way you think about investor relations.