IR Monitor – 21 February 2024

In this week’s newsletter:

In this week’s newsletter:

• Lyft’s wild earnings ride was an IR nightmare but a surprisingly common scenario. Data shows that companies have frequently had to update earnings & dividend releases.
• Carl Icahn gets two seats on JetBlue’s board, reports CNBC. There is no better time to have an activist on the board – at least if you are a JetBlue shareholder. This is less the case if you are the brand-new Chief Executive Officer, CNBC also concedes. 
• Skyrocketing Arm share price shows need for UK reform. Loss of the chip company listing to New York shows why it’s time to revive London as an IPO venue – Craig Coben
• Beyond London, BreakingViews makes the case for a revival on the continent as well: Europe’s wilting bourses get fresh cause to unite.
• Morgan Stanley notes higher mentions of operational efficiency on earnings calls.
• And finally … How companies say ‘Layoffs’ without saying ‘layoffs’: Bloomberg reports on the wonderful new lexicon of euphemistic and vague synonyms.

This week’s news

Lyft’s misfortune may not be as uncommon as we think

It looked like Lyft’s luck was finally turning around. Investors were excited at the prospect of the ride-hailing app’s newest set of results, with shares soaring more than 60 per cent after the company released its latest earnings announcement which guided for a 500 basis points margin expansion in 2024. Less than 24 hours later, it emerged that there was an error in the earnings release, due to an extra 0 tacked on to the end of the “500”. CFO Erin Brewer then jumped on the earnings call to confirm the mistake and CEO David Risher told the media it was “My bad.” The whole debacle garnered widespread sympathy from FinComms professionals, with many shuddering at the thought of this happening to them. However, as IR Magazine has reported, Lyft was not alone in having to update its announcement as incorrect numbers, missing tables, mixed-up dates and wrong phone numbers occasionally find their way into earnings releases. Whilst it does sound like a nightmare scenario to be going through, Lyft’s IRO should take some comfort in knowing she is not alone as at least seven companies have had to update their earnings press releases since October.

There is no better time to have an activist on the board – at least if you are a JetBlue shareholder

After acquiring nearly 10% of JetBlue, Carl Icahn has secured two seats on the board of the company, spelling good news for JetBlue’s shareholders according to CNBC. Investors would have been happy to see that the airline’s shares were already up more than 18%, with high expectations that the company would successfully return to profitability and improve operational efficiency. But these changes have all been happening during Joanna Geraghty’s first week as JetBlue’s new CEO. Now that Icahn has secured two board seats, the pressure is on Geraghty to work with him to execute his plan to close JetBlue’s valuation gap. Furthermore, she has to ensure she can come up with a feasible growth plan for the company, as JetBlue has lost more than $2 billion since the beginning of 2020. Icahn will have a choice of either working with management towards a shared goal, or adopting a more conflictive approach. The Company’s progress towards its 200 million cost savings target will be a critical measure of success, and a good indicator of the shape of things to come.

Arm’s share price boom fuelling the debate on the UK equity market

From across the Atlantic, London’s stock market is watching in envy as Arm’s share price reaches unimaginable heights. The UK chip designer’s September debut on Nasdaq was lukewarm; however, the company very quickly bounced back – with the stock nearly doubling after its most recent earnings announcement, as demand for AI applications soared. The City can only look on and imagine what could have been after its attempts at lobbying SoftBank to relist on the LSE fell to pieces and Arm announced it would be pursuing a “US-only listing.” Arm could have thrived in London and the City has more than enough capacity to support a listing as big as the global chip leader. Craig Coben from the FT argues that reform is needed, and London needs to find a unique selling point for investors. This should serve as a wakeup call for the UK to revive London as a listing exchange.

A revival of the continent’s Bourses is also desirable – BreakingViews

Can anyone resist the sweet allure of the NYSE… or at least resist the temptation to delist during these trying times? With Italian oil refiner Saras and fashion group Tod having announced their decisions to delist over the weekend, BreakingViews asks for euro zone trading venues to wake up and smell the coffee. Arguing that individual efforts by European governments to make their countries’ venues more attractive cannot hold a penny (euro?) to the NYSE’s power, Lisa Jucca calls for a reduction in the number of European exchanges and a union of Euronext to rival the stock exchange over the pond. To do so would require overcoming persistent competition concerns and loosening national controls over trading venues, market supervision and differing regulations on e.g. insolvency and disclosure, which governments may not be keen on… but with European startups only attracting half the funding of US rivals, and with listings down 20% over the past year, they may find themselves with a renewed motivation for change. 

MS: higher mentions of operational efficiency on earnings calls

Morgan Stanley has shared a rather tasty bit of analysis in a recent piece of research which highlights the current state of the US economy. Transcript mentions of “operational efficiency” are at an all-time high, with firms focused on expense discipline while investing in future productivity drivers such as AI. In fact, many seem to be targeting a 2-for-1 deal of achieving operational efficiency through AI investment – especially those in the Software, Professional Services, Health Care Services, and Financial Services sectors. Watch this space to see how that turns out. Morgan Stanley notes that the high operational efficiency factor has outperformed since AI took centre stage for investors last year, and is now seen as an extension of the quality factor – so actually, maybe watch that space instead?

And finally … How companies say ‘layoffs’ without saying ‘layoffs’ – Bloomberg

As communications people, we’re admittedly familiar with a good-old euphemism – but there’s a difference between managers ‘softening a difficult conversation’ and executives trying to rationalise and soften the action for themselves. Bloomberg notes some of the creative new language used most recently around layoffs, which Stanford professor Robert Sutton suggests is “anesthetising” and “jargon monoxide.” Overly delicate language is the result of “moral disengagement,” according to Harvard Business School’s Sandra Sucher, and can do more harm than good as it neglect the harm being caused to laid-off employees’ livelihoods. Your IR Monitor writers for this week sincerely hope that any personal understanding of this topic remains purely theoretical, of course…

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