IR Monitor – 20th April 2022

This week’s news

Musk targets Twitter board as company adopts ‘poison pill’ 

Reuters has reported on the latest news in the Elon Musk – Twitter saga where the former took a swipe at the board of the latter after the social media company dropped a ‘poison pill’ to protect itself from Musk’s $43 billion cash buyout offer. On Monday, Musk tweeted “Board salary will be $0 if my bid succeeds, so that’s ~$3M/year saved right there.” This follows Twitter’s move to adopt a plan to sell shares at a discount to prevent any attempt by shareholders to amass a stake of more than 15%. Musk, who currently has a 9.1% stake, launched a poll the previous week asking his 80m followers if “taking Twitter private at $54.20 should be up to shareholders, not the board”, to which a large majority responded “Yes”. As of Tuesday, shares of Twitter were up about 4% at $46.85, still significantly below Musk’s offer of $54.20 per share, and they have risen roughly 15% since Musk disclosed his stake on April 4. The poison pill remains hugely contentious in the world of IR given the perception that it favours the interests of incumbent boards rather than investors.

How to engage the digitally native next generation

In a recent IR Magazine article, Linda Montgomery has revealed what investor relations professionals can learn from Gen Z investors. Gen Z and Millennials are part of a growing group of investors who view cryptocurrency as a viable substitute for flat currency. Generally, they are big users of social media platforms Twitter and Reddit and communication platforms such as Telegram and Discord. Montgomery suggests that such investors want to be engaged with the coins and companies they follow; they want to be part of a movement and a product they love. As an ‘IR moat’ is a team’s ability to create highly engaged and loyal long-term investors, Montgomery makes the further suggestion that investor newsletters and traditional news media sources are old school and even email may be a bit passé with these investors. Instead, this group favours blogs for news, or podcasts. Further, simply social listening is no longer enough; sophisticated AI and tools for sentiment tracking are needed to understand what’s being discussed – and who’s discussing it.

Global IPOs: A blockbuster year

IPOs boomed in 2021, according to a White & Case report, with both the number of new listings and the total proceeds raised breaking records. They say that the global IPO market broke new records in 2021 on the back of robust stock market performances and that every region of the world saw significant increases in the number of businesses coming to market. In the report, the most significant trends were the energy transition and growing digitalisation across all industries. The report concludes by noting that the dust is settling after the flurry of 2021 activity and the IPO market is facing considerable headwinds.

Macron urges EU-wide executive pay curbs in campaign battle with Le Pen

President Emmanuel Macron has called for an EU-wide framework to cap executive pay after anger in France over a €19.1m package for the head of carmaker Stellantis, the Financial Times has reported. The criticism of the award to Carlos Tavares came as Macron entered the final weekend of the French election campaign seeking to fend off far-right challenger Marine Le Pen (who also condemned the pay for the head of the Franco-Italian company). Macron called Tavares’ pay package “shocking and excessive” on Friday and said a fight to ensure executive pay levels were not abusive should be led at the EU level.  “At some stage we have to lay out ceilings and bring in a governance structure at European level that makes things acceptable, otherwise at one point society will explode,” Macron told Franceinfo radio. The possibility that such ceilings might drive captains of industry from France to the UK (or even the US) does not seem to have occurred to Mr Macron.

Biotech’s EBITDA games

When he was a banker, Macron had to ask what EBITDA was. What would he have made of EBITDARD? Messing with financial metrics is as old as the measures themselves, according to BreakingViews. And biotechnology firm Prenetics is now proving that the drive to be creative with the metrics has not slowed. The company, which focuses on genomic and diagnostic testing, gained prominence during the pandemic for its Covid-19 screening. This week it announced that U.S. watchdogs have given it the nod to list in New York. The deal has valued the Hong Kong-based outfit at $1.25 billion – 4.5 times revenue, or a hefty 30 times EBITDARD (sic); this is a new measure which somewhat audaciously excludes R&D. Start taking out expenses central to business operations and financial measures both lose meaning and skew valuations: Add back Prenetics’ $11 m in expensed R&D and it’s priced at an extremely punchy 41 times actual EBITDA. Investors want to back innovative businesses. Inventive accounting, though, is a warning sign.

And finally… Sure, Work Makes Us Want To Swear. But Should You?

An analysis from Sentieo recently found that expletives in transcripts of quarterly earnings calls, investor conferences and shareholder meetings rose to a five-year high in 2021. Done right, swearing can provide an emotional release, psychologically girding you to withstand pain and cementing team ties. On the other hand, deploy a curse at the wrong moment, or in the wrong company, and it can swiftly derail your career. The Wall Street Journal has looked at swearing in the work place and provided suggestions on how to get this delicate balance right. Generally, you should look not one but two rungs above you on the organisational chart to determine what language is acceptable at your company. Furthermore, you should try to decouple swearing from complaining, so that you don’t come across as doubly negative. For now, it appears that nobody is listening to the Journal: in Q1 of this year 50 transcripts contained expletives, up almost 20% from Q1 last year.

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