Tweeting Earnings

Here are the three basic social media channels that we used for our first earnings call yesterday:

1. The LinkedIn Blog – post from the CFO
2. LinkedIn’s Company Page – will link to our twitter page @linkedin  (didn’t want too many tweets, cluttering our homepage there, so we decided to have select tweets that redirect to our Twitter page where I’d be live tweeting the call)
3. LinkedIn’s Twitter Page (real–time updates during the earning call)

In addition, specific to the earnings call – I found the following two channels helpful. More on that in just a second.

1. LinkedIn’s Slideshare Page
2. LinkedIn’s StockTwits Page

Leveraging specific LinkedIn social media tools. How LinkedIn managed disclaimers. Includes use of StockTwits.

It’s not over yet, but by our count more than 150 public companies have already announced their earnings on the popular microblogging service, which recently passed 20 billion tweets served.

Sure, tweeting financial performance data may be good for these large, blue-chip companies, but the same may not be true for smaller, less visible firms. According to research from the University of Michigan, small and micro-cap companies that participate in greater tweeting “during news event windows is associated with lower bid-ask spreads and greater depths.” Meaning, essentially, a lower stock price. Not good.

Tweeting earnings can have other harsh side-effects. If a company announces earnings news on other sites (such as their corporate website) first, then turns to Twitter (sometimes hours later), it is a slap in the face to the company’s loyal followers. Here are some examples of delayed earnings tweets (courtesy of IR Web Report):

25 Jan

Earnings Tweets @EarningsTweets

• Reply
• RetweetedRetweet
• Delete
• FavoritedFavorite
• · Close Open Details

$BA 4Q11 Conference Call Participants: Scott Fitterer, VP of IR; Jim McNerney, CEO & Greg Smith, EVP & CFO Elect. #boeing #earnings

Aggregation of earnings tweets from S&P500. Good source for examples.

Our view is that live tweeting scripted earnings call remarks adds little value since the information typically is already provided in the earnings release, which often precedes the earnings call by an hour or more. None of the live tweeters is distributing information from their earnings call Q&A sessions, which are the most valuable parts of these calls as they often elicit new information.

It may be better for companies to tweet highlights from their earnings releases but play down the scripted remarks on their earnings calls, either by tweeting only new information not contained in the release or by setting up separate Twitter accounts for those who want to receive the tweets rather than listen to the webcast.

StockTwits offers perhaps the best solution because each company has two message streams: one for messages containing the company’s ticker symbol and one for all company messages. By excluding their ticker symbols from duplicative earnings call messages, companies can still deliver the information to those who want it while avoiding unnecessary duplication in their “ticker streams.”

Content of messages key

While the volume of messages during live tweeting sessions has the potential to make companies seem overbearing and promotional, the content and tone of the messages is a more important factor for companies to consider.

Messages should add value to the recipient by imparting new and relevant facts rather than pushing out PR messages or distributing information from earnings call scripts that is already contained in the preceding earnings release. Taken as a whole, the messages should provide a balanced picture of the company’s results.

Companies also must be cognizant of the disclaimer requirements for certain types of information in their messages and take steps to ensure that these messages are accompanied by appropriate cautionary language even when viewed in isolation from other messages, as LinkedIn did in the above example. Forward-looking information and non-GAAP measures are key areas companies should be concerned with.

eBay routinely asks for audience feedback on its live tweeting practices.

Finally, companies must be prepared to respond to users who react to their messages on social networks. While history has shown that investors seldom ask questions via social networks, companies must be prepared to respond quickly when they do , even if to say that they will follow up later. There is nothing worse than a company that sends out a barrage of messages to its followers but then fails to respond to feedback or questions from the audience.

Live tweeting around earnings announcements has the ability to improve visibility for companies in the market, give investors real-time access to new, high-value information and open up new channels of two-way communication.

However, like any new practice companies should focus on adding value to their audience and be willing to adjust their practices when they miss the mark.

eBayInkBlog

eBay
SF - Bay Area

Joined Sep 15, 2010

http://www.ebay.com/

Official eBay news and information from eBay Blogger in Chief, Richard Brewer Hay. Founded in 1995, eBay Inc. is the worldwide leader in shopping and payments on the web.

Financial numbers oriented. Uses Stocktwits. Employs #ebayQ411 convention.