got Zillow’s leaders thinking about new ways to connect with investors.
Early last month, the SEC confirmed that Regulation Fair Disclosure (Reg FD)—which requires companies disseminate material information “broadly and non-exclusively”— applies to social media just as it does to corporate Web sites. The SEC said companies can use Twitter and Facebook for major announcements “so long as investors have been alerted about which social media will be used to disseminate such information.”
The SEC began investigating social media use by public companies after Netflix CEO Reed Hastings posted material information about monthly viewership to a personal Facebook page, without having done so before, and without an accompanying press release or SEC filing. The SEC took no action against Hastings or Netflix, which has also been an innovator on its earnings calls, answering e-mailed questions prior to taking questions over the phone from analysts. (On its most recent earnings call in April, Netflix executives answered about three dozen e-mailed questions before taking one from analysts on the phone.)
Jones calls Zillow’s approach “evolutionary rather than revolutionary,” noting the practices of Netflix, and Dell, which solicits questions before its earnings releases from StockTwits and Twitter, and others. And it’s not just technology companies. Ford CFO Robert Shanks took to StockTwits last Friday—two days after the company’s first quarter earnings were released—to answer questions from individuals.
Zillow appears to have distinguished itself by taking questions in real time, during a live conference call.
Curnutte says the transparency of social media fits Zillow’s broader purpose of opening access to information about real estate. She says Zillow also hopes its Twitter Q&A will be “a catalyst for more people to participate in social media in the investment community.”
At Canaccord Genuity, a new Twitter account—@CG_Internet—was created for the purposes of asking the question, says Graham.
“We have to make sure that any communication that I have that’s public—whether it’s writing a research note, or sending an e-mail to clients, speaking on a conference call or submitting a question on Twitter—complies with the letter and spirit of securities regulations,” he says.
Remembering the days when equities analysts waited around the fax machine to get earnings reports, Graham thinks new approaches such as Zillow’s are more fair.
“The more you can get information out to everyone who has a stake in that security, in a democratic way, the better it is,” he says, adding, “I’d be surprised if we didn’t see this start to become a lot more commonplace.”
