A well–run company does not guarantee a strong share

Sometimes the simplest things are the most challenging. Every publicly traded company needs a concise, comprehensible, and compelling description of why their company is worth investing in. This applies regardless of whether it’s called an investment case, “5 reasons to invest in X,” or an equity story.

There are well over 1,000 listed companies in Sweden, and for all of them, convincing existing and prospective investors of the strength of their own company’s business idea, market position, strategy, management, and future opportunities is crucial.

Recent years have seen a ruthless dismissal of several growth-oriented business models in favor of a greater focus on profitability and cash flow. Other changes in the environment have also brought about new requirements and expectations for many publicly traded companies. This creates the necessity of reviewing how the company is described as an investment to remain relevant and credible to investors in a new market environment . The equity story is an opportunity to enhance awareness, knowledge, and understanding of the company and its prospects. The messages conveyed in the equity story can both change and clarify the company’s position going forward with respect to the capital market and business media. This establishes conditions for the correct valuation of the stock and builds trust in the management, the company, and the strategy.

The equity story describes the company’s path forward and makes its business comprehensible. Among listed companies, an equity story published on the investor relations website is considered a hygiene factor. However, there is significant variation in how developed and updated the description is and how companies choose to prioritize and highlight their equity story.

Stock prices are driven by expectations of change and development. However, a well-run company is no guarantee of a strong share. An equity story explains how the company creates shareholder value currently and also builds a credible story about strategy and change that can drive shareholder value in the future.

If the company has undergone major changes, this description on the website is what current and potential investors should be referred to. Therefore, both the structure and format must be adapted to where the company and its industry are positioned and where they are headed. The person responsible for the company’s investor relations—whether it is the CEO, CFO, communications director, or IR manager—needs to adjust the company’s equity story as needed based on changes in the company, its journey forward, and if the market has changed. Otherwise, an obviously outdated description risks giving a negative impression of the company to a potential investor.

If you would like to hear more about Diplomat Communications’ process for developing or updating your company’s equity story, please feel free to contact our IR specialists Linus Paulsson or Kristian Stålberg.