Why Too Many Press Releases is Detrimental for your Public Company

A press release (PR) is the main method of communication that many small public companies have to communicate their progress with their shareholders and the general public. With little to no institutional research coverage available for the majority of public companies, especially in the OTC markets, the need for press releases is quite prevalent and can be a fantastic tool to gain the attention of both retail and institutional investors. It is even easier now with the use of social media and abundance of news outlets. However, press releases should be released cautiously as the the excessive use of them to update the market can actually end up hurting your public company more than you realize.

I’ll keep it short, simple, and straight to the point - a press release announcing something exciting such as new management addition, an acquisition, capital raise, etc. is beneficial to release as it is truly an important piece of news for your shareholders to be updated. One can even argue that any other piece of news such as moving offices, updates to a project that is being worked on, or rolling out a new marketing campaign is just as important since the goal of a press release is to communicate efficiently and effectively with the market. All of this is standard practice and is true, but where I see companies going wrong is when they put out an excessive amount of press releases continuously and end up diluting the value and impact that their future press releases will have on their stock price and shareholders.

For example, if you want to update your shareholders that you listed a product on Amazon or moved offices, do not make that the headline or main story on your press release. It’s simply not necessary and will confuse many investors on what is important and what is not. I see micro-cap companies putting out a press release almost every day or every other day and do you know what that ends up accomplishing? Nothing. It will end up working against you as it is usually too much for an investor to keep up with for a long period of time and devalues the “wow” effect that a specific piece of news would have on the market.

Instead of utilizing a press release on something minor, I would suggest filing a simple 8K if it truly is a material event or wait until you have a good PR to put out then include the minor news somewhere within that. This won’t dilute the effect your press releases will have on the market and will allow you to continue taking advantage of this tool to inform your shareholders and overall market of your progress as a company.

Overall, you should be mindful of what you are putting on your press release before it goes out and ultimately ask yourself these questions:

  • Is this truly an impactful or significant event for the company?

  • How many times have I sent out a PR this past week?

  • Can I include this on one of my other PR’s that I have planned instead?