Twitter: 49 words adds $10b to Apple

What happens when an investor or analyst breaks news, leaks sensitive information, or shares previously private discussions via social media?

What happens when an investor or analyst breaks news, leaks sensitive information, or shares previously private discussions via social media? These posts can shape reputations, affect share prices, and drive increased regulatory scrutiny, requiring an integrated approach to social media engagement that many companies are ill-prepared to implement.

On Tuesday, activist investor Carl Icahn used Twitter to announce that he has amassed “a large position” in Apple stock and that he had conversations with the company's CEO to share his opinion “that a larger buyback should be done now.”

After only two simple tweets totaling fewer than 50 words, Icahn moved billions in market value as his posts pushed Apple's stock nearly 5% higher, adding nearly $10 billion to the company's market capitalization.

Icahn's high-profile use of Twitter to break news comes four months after the SEC said that postings on sites such as Facebook and Twitter can serve the same functions as press releases and company websites, albeit still not meeting disclosure requirements, to bring news to audiences that prefer delivery via social media.

While the SEC's new guidelines and shareholder use of social media as a form of communication have obvious effects on the IR function at many publicly traded companies, increased investor use of social media and its possible effects on corporate communications and marketing has gone largely ignored.

For many companies, social channels like Facebook and Twitter are the province of the corporate communications and marketing chiefs, leaving the investor relations officers with little access to these channels. As financial publics continue to grow in their reliance on social media, investor relations commonly has no defined role in managing social media channels, while corporate communications and marketing are put in situations to make real-time decisions about subject matter that is typically outside of their remit. It's the worst of both worlds.

Bringing these functions together requires three critical steps that most public companies should look to address immediately.

1.      Create and educate staff managing social media profiles on protocols for tracking and measuring investor commentary.

2.      Build working relationships between IR and corporate or marketing teams to ensure that investor or analyst relations goals are bolstered by social media communications, potentially creating a position to liaise between the disciplines.

3.      Explore the option of creating designated channels, like a blog or separate Twitter profile, where IR staff can independently own and manage conversations.

The proliferation of digital content and the rise of social media have produced an ecosystem in which customers and employees have equal exposure to messages and events that are ostensibly more relevant to investors and lawmakers — and vice versa. An organization's ability to narrowcast its communications to discreet stakeholders groups is gone and it's not coming back. Therefore, companies, especially those that are public, need to account for this reality by adopting a coordinated approach to managing its various communications, putting digital and social channels near or at the top of the list.

Mitzi Emrich leads the digital and social media practice FTI Consulting.

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