Breadcrumbs
Breadcrumbs conjure up images of the famous fairy tale “Hansel and Gretel”, or perhaps someone feeding ducks at the park. Unsurprisingly, it probably doesn’t bring up thoughts of pending contracts or potential new customers, but it should.
While corporate disclosures are prime opportunities for media exposure, don’t fall into the ‘intrigue’ trap when material news is sparse. A short-term price spike in your stock is never as solid as a long-term upswing. That’s why it is never in your best interest to weave clues or drop hints using forward-looking statements such as "we expect to announce soon” when talking directly to the market. Fraught with undue risks and uncertainties, communication around these sorts of operational expectations may also have legal implications if not made previously public.
Consider the “Hansel & Gretel” analogy: two hapless kids leave a trail of breadcrumbs so as not to get lost in the woods. Yet, the birds eat the breadcrumbs and the kids do get lost. Fortunately, the story ends happily but, it won’t for your share price if you prioritize a high stock price over management credibility.
The markets move on unanticipated good news, not information it’s expecting. While that sounds mutually exclusive, it’s really not. It’s far better to hold off and time the news drop appropriately to gain as much exposure and bounce as possible. While no one should place an excessive reliance on forward-leaning statements, some investors may factor them in when calculating enterprise value.
The most relevant lesson here, is that of judgement. Focusing on stock price at the expense of trust will undermine your credibility in the long run. There is a system to how you feed information to the market and if you stray, it could cast doubt on future messaging and interest, may fall away completely.
Leave the breadcrumbs to the birds. In doing so you focus on building a high-trust reputation and company culture that will be recognized by the market – and reward you long after you make your way out of the woods.
