Your company just became a meme stock. Do nothing.
Let’s say you’re the Chief Communications Officer for a company whose equity just became a meme stock — that is, a company that’s achieved sudden fanatical support among retail investors on Reddit, Discord, and other online public forums.
Your share price is reaching new heights at an alarming rate. Redditors are saying you’re misunderstood by hedge funds and institutional investors. Your board of directors, composed of people who aren’t active on Discord servers let alone aware of what one is, are completely puzzled by what’s occurring and who’s driving it. Your employees are watching on, getting questions from their friends and family, and — if they’re equity holders — running numbers in their heads about their own returns. Bloomberg, CNBC, the Wall Street Journal, and the rest of the financial media are banging down your door.
As the communications leader, your management team is looking to you to plot a path forward through a situation with little precedent.
Should the company try and take advantage of the moment to grab media attention and educate the market on its business? Should your CEO Tweet back to the celebrity investor who posted a screenshot of their trade confirmation accompanied by a string of rocketship emojis?
Or do you try and remind investors and the public about your fundamentals and reiterate guidance in the hope of reducing volatility and stabilizing the stock? Perhaps announce an investor day to present your long-term plan?
And how do you give the board and employees a feeling management has its arms around what’s happening and where it’s going?
This is a lot to process, and there will be plenty of people inside and outside the building with strong opinions that you need to Do Something about your newfound bubble status.
Do the opposite.
Well, externally at least. Internal audiences — employees and board members — absolutely need your continuous dialogue explaining what’s happening, why it’s happening, and what you plan to do, or not do, about it. But trying to do anything else will complicate the situation even further and subject the company to additional potential reputational and legal risks.
Adopting an aggressive proactive media strategy may feel good, fire up your new supporters, and convey a sense that you’re taking the bull by the horns. What better time to do media than when the stock is ripping upward and potential customers are paying attention? It’s what you might do if you just reported a monster quarter.
But since you know the run-up is artificial — driven by short-term motivations and not a financial or strategic catalyst — you risk being seen as opportunistically adding fuel to a fire and losing credibility with investors once there’s a return to more normal trading conditions.
Trying to cool the market through comms also poses outsize risk. For one, it draws into question whether the company is acting in shareholders’ interest — or rather, which groups of shareholders it’s acting in the interests of. And if you believe shares are destined to return to more rational prices over time, do you need to aid it in doing so? All you’ll have done is make enemies of your new shareholders who are actively rooting for you and your strategy. You might get some plaudits from professional talking heads for being the adult in the room, but that credit won’t carry over when you report disappointing earnings in a future quarter.
And no matter whether you fan or douse the flames, you’re likely to trigger a shareholder lawsuit — to steal from Matt Levine, everything is securities fraud.
That’s what makes this scenario so fascinating. It’s the Kobayashi-Maru of corporate communications. Sometimes the only winning move is not to play.
