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The majority of FTSE CEO’s do not have a presence on Twitter. In contrast, CEO’s of major US companies such as Tesla, Amazon, and Apple actively engage with their audiences on social media platforms. These companies boast a combined market capitalisation of $5.3 trillion.

Similarly, prominent hedge fund managers like Steve Cohen, Ray Dalio, and Bill Ackman have embraced twitter as a communication channel. With a combined AUM of $160 billion, these managers recognise the power of social media in establishing their presence and engaging with a wide audience.

Notably, the Chair of the SEC, Gary Gensler, maintains a Twitter account, while the Head of the FCA, Nikhil Rathe, does not have a Twitter presence.

So, this raises an interesting question: why don’t UK investor relations firms advocate harnessing the power of social media for their clients? The answer lies in their unfamiliarity with effective social media strategies and their primary focus on institutions rather than retail investors. Everyone is swimming in the pool of institutional capital, only a handful, including Sociables Express, are swimming in the retail capital pool.

What is Wall Street doing more effectively than the Square Mile?

The UK capital markets have been slower to embrace the power of social media and the digitalisation of finance and investing. Many companies in the Square Mile remain anchored in outdated practices and fail to leverage the potential of social media to connect with investors and shape perceptions. Consequently, UK equity markets are currently undervalued, unloved, and unappreciated.

The main reason can be witnessed in the contrasting approaches of financial PR, marketing, and investor relations firms in Wall Street and the Square Mile. Wall Street actively embraces modern strategies, retail investors, finfluencers, and social media, where as UK firms lag behind. The UK investment industry’s reluctance to target retail capital and its limited understanding of social media have hindered its progress. While Wall Street engages both institutional and retail capital, the Square Mile primarily focuses on institutional investors. This has created an environment where many listed firms are being underserved by their investor relation’s team.

UK financial PR, marketing, and investor relations firms often view social media, finfluencers, podcasters, streamers, and public investment communities with disdain, dismissing them as “silly,” “dumb money,” or “unworthy.” This failure to adapt could prove detrimental as the new wave of social media-driven equity investing and finfluencers reshape the landscape. These emerging forces will soon overshadow traditional and legacy media.

Why could this be a problem for UK investor relations?

Hedge fund managers, career traders, and stock enthusiasts are recognising the passive strategies employed by financial PR, marketing, and investor relations firms, are now a weak point for companies. Witnessing the impact on Wall Street since 2021, they seek to replicate its success here in the UK. Shareholder activists, finfluencers, and social media traders are now establishing relationships with hedge funds, high-net-worth individuals, and private equity firms. They are starting to work with compliance and legal experts to ensure their work and content complies with rules and regulations. They are hungry and they are driven, and they aim to Americanise the UK stock market.

Bain Capital teams up with Meme Influencer Litquidity

https://fortune.com/2022/01/13/litquidity-twitter-bain-venture-capital/

This shift presents a challenge for UK investor relations firms.

Who controls a retail investor’s perception of a company over social media?

What if a finfluencer or investment community starts discussing the positive or negative fundamentals of a listed company?

Fintwit, Reddit and Fintok can rapidly alter the perception of a company and its board of directors, potentially undoing months of work conducted by PR, marketing, and investor relations firms. How can companies counter these potentialities?

What happens if a set of sophisticated traders capitalise on the passive approach currently employed by investor relations firms? Using it to acquire influence over the firm and its board.

What happens when investors start publicly lobbying large shareholders to adopt their proposal? Using social media as the vehicle to execute this lobbying.

These are a few of the many questions that UK investor relations firms will soon need to address. The irony about this is many investor relations firms do not see this coming, and they don’t realise that their passive approach is an opportunity for some.

The future

Within the next twelve months, we anticipate hedge funds and day traders in the UK to follow the lead of their Wall Street counterparts, trading based on the actions of retail investors and finfluencers. This will create a situation where a finfluencers opinion or position on a stock can significantly determine its trading volume.

UK investor relations firms have absolutely no clue about the impending challenges that are about to hit their clients.

Sociables Express predicts that investor relations firms will resort to building relationships with these finfluencers to safeguard the perception of their client’s company. It’s a situation where, if you can’t beat them, consider teaming up with them. However, as of now, we believe the majority of UK investor relations companies would not welcome finfluencers discussing their clients’ stock prices. Finfluencers are an outside force that cannot be controlled; this is a risk for investor relations firms. During the regional banking crisis in early 2023, retail investors heavily shorted banking stocks and publicly shared their positions on social media. To our dismay, some even expressed intentions to bring down the banks. Many of these investors profited significantly from the banking crisis, it was like Christmas coming early for many people within the thousands of private investment communities across social media.

How can investor relations firms counter a potential crisis like this?

How can they protect their clients from this rising wave of financial populism?

How can regulatory agencies effectively monitor and mitigate such activities?

Unfortunately, there is no simple answer.

‘I Came to Kill the Banks’

https://www.wsj.com/articles/pacwest-bank-stocks-meme-stocks-6c042482

UK finfluencers will soon gain influence over some UK listed companies, particularly AIM companies, small-cap stocks, and various mid-cap stocks. These finfluencers mainly consist of both sophisticated and experienced financial people. Many have worked for banks and/or funds, and many of them have a lot of connections in the industry. Companies that fail to embrace this emerging trend risk making their clients vulnerable to finfluencers who can shape the perception of their clients company.

In conclusion, UK financial PR, marketing, and investor relations companies must recognise the impending transformation of UK equity markets. Financial populism, the politicisation of stocks, the influence of finfluencers, Fintwit, Fintok, cult stocks, and social media-driven shareholder activism are all set to impact the UK equity markets. We believe this will start to occur when interest rates peak within the next twelve months. While this presents an opportunity for some, it could also be a nightmare for those who fail to adapt.

The era of feeding messages and stories to financial mainstream media is coming to an end, social media is the biggest form of media in the UK. Social media will reign supreme in engaging with retail capital, and we currently see this happening in America. The effectiveness of IR audit perceptions will diminish in the face of social media finfluencers and entities that can rapidly shape a perception. In a matter of hours, a single TikTok video, Twitter post, or YouTube video could profoundly impact a stock’s price, undoing months of work conducted by investor relations.

The ground under the UK financial PR, marketing, and investor relations industry has been rapidly shifting since January 2021. The traditional mindset and obsolete models must now make way for the digital mindset and the social media model. Adaptation is key.

It’s a case of Evolve or Dissolve.

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