Clearharts analysis of post IPO performance data underlines the importance for your share price of getting your IR strategy right in the first 6-9 months of being listed.
We had a lot of questions about last weeks blog post where we looked at post IPO performance and the staggering number of issues over the last 5 years that have seen marked underperformance since launch – a mere 81%! Surely this was just a sign of mispriced deals was the predominant response. Read on and you will see how the data underlines just how vital it is to get your communication right in the first 6 – 9 months of being a listed company.
We wanted to try and strip out the underperformance caused by mispricing in the IPO process, and we found that 55% of underperformers began their underperformance in the first month of trading and did not recover subsequently. However, after excluding these “mispriced” deals and looking at the remaining transactions, we found that it then took on average 202 days (c.7 months) before these also slipped into underperformance without recovering to date.
The difficulty involved in recovering the share price of a recent IPO after underperformance shouldn’t be underestimated. This isn’t hugely surprising given the limited track record at this stage of a listed corporates life cycle, when the market is in no mood to be forgiving of missed targets or disappointing results. Bottom line – the cost of getting it wrong at the start is significant. Markets have long memories and it’s crucial to get your communication with investors and the broader market right from day one.
Management new to public markets often see IR as a cost of listing, and an expense, rather than a value added driver of the share price. However, having your investor relations strategy primed, honed and on point from the get go will give you the best shot at consistent performance in the aftermarket, long after your corporate advisors involvement has ceased.
Here at Clearhart, with our decades of experience in equity brokerage (both sales and research) and direct investor relations expertise, we know the factors that are crucial to your success. Contact us to find out how we can help you to shape a solid, consistent IR strategy that will support your share price performance in the aftermarket.