This week the Securities and Exchange Commission ruled that “postings on sites such as Facebook and Twitter are just as good as news releases and company websites.” Some companies, like Dell and eBay, already use Twitter in conjunction with more traditional methods to deliver news and updates to investors, but the SEC’s decision could be a game changer for corporate communications and the ways in which shareholders get investment information.
Driving a Potential Surge in Business Communication
“With this news companies are likely to communicate more via social media and encourage investors to follow them on these new platforms,” says CNBC’s Julia Boorstin. “This could drive a surge in business communication and activity.” Jeff Corbin, author of Investor Relations: The Art of Communicating Value, told Boorstin that the SEC’s decision highlights “the importance of channels such as Facebook and Twitter to the way average individuals now communicate,” and Howard Lindzon, founder of Stocktwits, echoed that sentiment. “A press release on Yahoo finance—who reads that anymore?” he told Reuters’ Emily Stephenson. “You’re going to read news on your Facebook stream, your Twitter stream. The industry is changing, and it was a matter of time before it was going to be regulated.”
Implications of the Ruling
Content strategist Ryan Northover explored the impact it could have on the social media landscape for Social Media Today: “It means platforms like Twitter and Facebook will become networks where literally trillions of dollars in investment decisions will be made, beyond the trading desks and Bloomberg terminals of millions of money players across the world.” It’s impossible to predict the exact effects that the ruling will have, but companies would be wise to follow the SEC’s lead. With the right resources, strategies and content, social media may very quickly become the key way companies connect with shareholders. Many shareholders will become late adapters to social media; more companies will need social media managers; and more mainstream communication platforms will become less dominant.