So You’ve Just Completed Your Cross-Border IPO
By Edmond Lococo, Senior VP Public Relations – Asia, ICR
Congratulations. You’ve just completed your cross-border IPO. After many months, or maybe years, of hard work, your shares are trading on Nasdaq or the New York Stock Exchange. You’re a public company now.
Bet you’re glad that’s over, right?
But here’s the thing. Listing day isn’t the end. It’s just the beginning when it comes to PR. That’s because you don’t get to decide whether or not you “conduct PR” – PR just happens. The only question is whether and how you engage to shape the end result.
As a public company, you will attract more media interest, and scrutiny, then you ever did as a private company. Sure the IPO road show was grueling, and those listing day media interviews too, but your management team must now be prepared to be the public face of a public company 24/7. Answering tough questions from reporters and getting the company’s message out above all the other competing narratives must now be considered a vital part of the job.
So, is your management ready?
When interacting with media, management will need to be able to focus on the strengths of your business, its growth strategy and key differentiators and to do so while safely utilizing and referring to publicly available information. They need to be able to communicate the company’s focus on creating long-term value for the enterprise and shareholders, while avoiding the pitfalls of either making forward looking statements, or providing material, nonpublic information outside of the formal channels established by regulators.
It may seem simple, but it’s not as easy as it sounds, and, most importantly, the consequences of making a mistake can be significant.
Consider the case of Qudian, an online lender from Beijing, which had a splashy IPO on NYSE in October 2017, raising $900 million in the largest U.S. IPO by a Chinese company of the year. On its first day of trading, the stock surged 43% above its IPO price of $24 a share.
While media coverage during the Qudian IPO generally had a positive tone, that tone turned negative very quickly after the IPO with publication of stories criticizing the company’s business model as unsustainable. Reporters soon began questioning both Qudian’s high interest rates, and its loan collection practices.
To address these criticisms, Qudian CEO Luo Min did an interview with a key influencer on the social media platform WeChat on October 22. Unfortunately, the interview only made matters worse. Many of Luo’s answers had a flippant tone, and some provided information that appeared contradictory to the company’s regulatory filings.
Luo’s comments were not well received by the media or investors, and helped trigger a plunge in Qudian’s shares. Qudian’s stock price tumbled by nearly 20% in the first trading day after Luo’s comments, and within three months of the IPO they had dropped almost 50% below the IPO price, which in turn has triggered a number of shareholder class action lawsuits against the company.
Making sure that your executives are ready for the harsh glare of the spotlight post-IPO will be an even bigger task than the IPO communications. It will require a consistent effort, and practice, to make your executives effective communicators of the company’s story. They will also need:
- Best practices for complying with Regulation Fair Disclosure, or “Reg FD”
- A clear messaging framework to define the company’s value proposition
- Media training on how to deliver that message with discipline
- A clear strategy for building and maintaining strong media relationships
- Guidelines for all executives on the proper use of social media
With a successful IPO behind you, you’ve come a long way, but the road ahead is longer still. Make sure that your executives are prepared for the journey.