As so much has already been written about the meme-stock rallies in companies like GameStop and AMC, I’m tempted to simply shrug like everyone else and play past it, as they say. Despite the terabytes of data already written on this topic, however, I believe there’s an underlying lesson here that public companies continue to miss: retail investors have the power to influence your stock and they should be courted, not thwarted.
Imagine for a minute if meme-stock-turned-bankrupt-retailer Bed Bath & Beyond (BBBY) had celebrated the literally millions of retail investors buying its stock instead of ignoring them? Hear me out. On the one hand, BBBY was struggling with sales and the resulting decline in profits. On the other hand, every retail investor is a consumer, including the millions of meme-stock holders. So what would have happened if the firm had given retail investors a shareholder-exclusive discount?
According to a recent Harris Poll commissioned by retail engagement and loyalty platform TiiCKER, 78 percent would have wanted a perk, 57 percent would have preferred a product discount and 50 percent of new – yes, new – retail investors would have bought the stock if BBBY had offered a shareholder reward or perk. And the closing argument for retail as the masked hero? A whopping 83 percent of retail investors say owning a stock makes them more likely to be a customer of that company!
A whopping 83 percent of retail investors say owning a stock makes them more likely to be a customer of that company!
But the missed opportunity didn’t end there. As profits at BBBY slid – even while the stock rose, thanks to the retail crowd – the firm could not raise capital because it was unable to get enough shareholders to vote for its proposed capital raise. Here again, BBBY ignored the data that shows 76 percent of these millions of retail investors would vote their proxy if they received a perk or reward, representing a sizable percentage of the shareholder base. And IROs know that more than eight in 10 retail investors vote with management, when they do vote, but less than 10 percent of retail investor accounts vote, according to Broadridge.
Up to now, most of the discussion on meme-stock rallies smugly ‘tsk’ at the inherent volatility of these events rather than recognizing a larger truth: the power of the retail shareholder is real, documented and should be engaged instead of dismissed. Retail investors are the most valuable of all public company shareholders and act almost like insiders.
They are predominantly long-term holders, they are twice as supportive of management as institutional investors when it comes to proxy voting, they’re brand-loyal and shop the companies they own and they want to be engaged with the companies they own via perks and rewards for ownership, but also via receiving direct communications (76 percent) and retail investor-only events (66 percent).
Fortunately, some companies are getting the message – and the benefits – from the resurgence in retail investing. Thanks to online and mobile trading platforms, retail investors have more access to the market than ever before. Social media platforms have opened channels for discourse related to investing strategies and company performance, and direct-to-retail communications – from companies like Lionsgate and its post-earnings Q&A or Spotify, NVIDIA and Reddit leveraging their platforms to talk to their retail investors – are being rewarded by retail.
Thanks to online and mobile trading platforms, retail investors have more access to the market than ever before.
What’s particularly important for IROs and CEOs to recognize is that today’s retail investors want to be considered in a brand’s decision-making and IR strategy, and it’s worth it for your company, your stock and even your sales.
Despite these findings, most public companies are still trying to uncover their retail investors, which is why I founded TiiCKER four years ago. As an IR and PR veteran of more than 25 years, I noticed an opportunity to bridge the gap between marketing and IR solutions through shareholder loyalty.
Today, retail investors can play a crucial role in your IR strategy. There’s plenty of opportunity even beyond loyalty programs: communications strategies, retail investor-focused earnings calls and educational initiatives, to name a few. No matter how you do it, generating retail interest through meaningful relationships can help your team build a roster of brand champions – your biggest cheerleaders – to stick by your side.
If meme stocks have shown us anything, it’s that we shouldn’t underestimate the power of the retail cohort. And if this isn’t enough proof, we can simply point to what this group is telling us.
To learn more about the Harris Poll and hear what retail investors are saying, visit: https://www.ir-impact.com/research-reports/shareholder-engagement-and-rewards.
