“It takes a long time to change the earnings process. We’re still just getting to the point where we’re writing our press releases differently, let alone using this technology.”
Corbin Advisors' Founder and CEO, Rebecca Corbin
Source: Bloomberg Law
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Earnings call questions, once deemed “boring” by Tesla Inc. CEO Elon Musk, could be in for a shareholder-led shakeup if a startup called Say Inc. has its way.
Say, which is working on investor communication tools, built a page on its site that would use Tesla’s Jan. 30 earnings call as a test case for letting shareholders submit questions. It wants to replicate the Q&A system at other companies.
Questions for company executives on earnings teleconference calls are typically limited to Wall Street analysts. Say is collecting shareholder questions on its site and will deliver them to Tesla’s investor relations department. A Tesla spokesman said the company will answer questions.
Say had collected about 100 questions from investors with more than $30 million in combined shares within 24 hours of its launch. The questions cover customer service challenges, production timelines, and other issues.
Say’s efforts, if embraced by other companies, could further democratize the process of communicating companies’ earnings results to analysts, the media, and institutional investors.
Other companies such as Zillow Group Inc. have taken earnings call questions via social media, but Say’s platform is the first of its kind because it verifies the questioners’ share ownership. Shareholders who want to submit questions have to sign in through their brokerage accounts.
“We’re building the rails for a direct communications framework between companies and their shareholders,” Say’s co-founder Alexander Lebow said in an interview. The startup is also developing an app for shareholder voting in company elections as part of its goal to encourage more individual involvement in corporate governance.
Tesla as Test Case
Tesla has previously included an individual investor on an earnings call. In an earnings call for the first quarter of 2018, CEO Musk dismissed analysts’ questions as “boring” and “dry” and turned to answer questions from Galileo Russell, who owns 66 Tesla shares and hosts a YouTube channel called HyperChange TV.
Russell had tweeted to Musk before the call if he could ask some questions, and Musk agreed to it.
Investors responded to Musk’s handling of the call by driving down Tesla’s stock.
After the call, Say reached out to Russell to help with its question platform. Russell talked with Tesla’s investor relations team about including one of Say’s questions on its next call.
“Elon places value on retail investors that have stuck with the company,” Russell said. Maintaining ties to these individual investors has been mentioned as part of the reason Musk abandoned a short-lived bid to take Tesla private.
Tesla makes sense as a test case for a new approach to earnings calls, said Rebecca Corbin, founder and CEO of Corbin Advisors, which advises public companies on investor relations. But Corbin isn’t expecting a “breakthrough” just yet.
“It takes a long time to change the earnings process,” she said. “We’re still just getting to the point where we’re writing our press releases differently, let alone using this technology.”