The Art of an Effective Shareholder Letter: Turning Numbers into Narratives
The Art of an Effective Shareholder Letter: Turning Numbers into Narratives
How IROs can build trust and clarity with every update.
When it comes to communicating with investors, public companies have a powerful tool at their disposal: the shareholder letter. Often included in an annual report—but increasingly distributed quarterly—a shareholder letter isn’t just a summary of financial results. It's a strategic narrative that can build trust, align expectations, and even reinforce a company’s brand.
What Is a Shareholder Letter?
A shareholder letter is a direct communication from a company’s leadership—usually the CEO or chairman—to its shareholders. The primary purpose is to provide an overview of the company’s performance over the past quarter or year. But beyond the numbers, these letters serve as a platform for leaders to articulate their vision, explain strategic decisions, and build a narrative that resonates with investors.
Historically, shareholder letters were simple recaps of financial performance. But as the role of investor relations has evolved, so too have shareholder letters. They have become a key component within the investor marketing toolkit.
How Shareholder Letters Support Investor Marketing Goals
Investor marketing is all about building a strong brand around your company and stock ticker. Modern investors expect more frequent communication, in formats they find accessible and easy to digest. They are also looking for strong signals of competent and trustworthy leadership—and these letters are one of the things investors look at to read between the lines.
A well-crafted shareholder letter should do three things:
Educate Investors: Clearly explain the company’s performance, strategy, and market conditions in a way that’s accessible to all investors, regardless of their financial expertise.
Build Trust: Be candid about successes and challenges. Transparency fosters trust, and trust is crucial for maintaining investor confidence. Effective shareholder letters demonstrate thought leadership in the category and a confidence in leadership to meet its stated objectives.
Align Expectations: Set realistic expectations for the future by clearly outlining the company’s long-term strategy and goals.
Key Elements of an Effective Shareholder Letter
Shareholder letters vary by company and executives; however, there are common attributes that many of them follow to meet their stated objectives. These aren’t just best practices—they’re must-haves for making a letter that truly connects with investors and boosts your ticker brand.
1. Clarity and simplicity
The best shareholder letters are easy to read. They avoid jargon and complex language. Instead, they focus on clear, direct communication. The goal is to make sure every investor understands the company’s performance and strategy without needing a financial dictionary.
2. Transparency and candor
Investors appreciate honesty. If the company faced challenges during the year, don’t gloss over them. Address them directly, explain the steps being taken to overcome them, and be transparent about what this means for the future. This honesty not only builds credibility but also sets realistic expectations for the future.
Consider this example from Block CEO Jack Dorsey, which walks investors through with candid remarks on the parts of the company’s he and the team are focused on “fixing.”
Or this example from Netflix, which transparently states that the company is “nowhere near where [they] want to be” in terms of content and entertainment before laying out a vision moving forward.
3. Engagement through storytelling
A shareholder letter should tell a story. This could be the story of the company’s growth, a reflection on the year’s major events, or an insight into the company’s long-term vision. Storytelling makes the letter more engaging and helps investors connect with the company on a more personal level. Warren Buffett’s letters to Berkshire Hathaway shareholders are a prime example—they are as famous for their folksy, engaging style as they are for their financial insights.
We’re seeing companies utilize the real estate afforded by shareholder letters to add additional layers of storytelling, including social proof from customer testimonials and media coverage.
Consider this example from Block, which pulls publicly-shared tweets from customers within its letter.
Rivian has included press quotes in its shareholder newsletter. This is effective since shareholders may not see every headline on their own. In aggregate, the media recap spotlights public reception and signals company momentum.
Sometimes, storytelling that’s straight from the executive’s mouth is most effective. In this example from Zillow, the company’s co-founder used the letter to introduce a major C-suite change, which included rationale for the decision, background on the hire, and a vote of confidence moving forward.
4. Focus on long-term strategy
While it’s important to discuss the past quarter’s performance, a shareholder letter should also focus on the future. What is the company’s long-term strategy? How does management plan to achieve it? This forward-looking approach helps to align investor expectations with the company’s goals.
When talking about key themes that will drive the company in the future, there is no such thing as overemphasizing. These statements should be repeated over and over again so that investors have a clear sense of where you’re going.
In this example from Rivian, the beginning of the letter opens with a succinct breakdown of the quarter’s highlights and priorities. Using this format, the key points can be digested at-a-glance.
5. Use of visuals
Incorporating charts, tables, and other visuals can help to break down complex information and make the letter more accessible. Historically, this has meant using data visualization to bring financial statement trends to life. Increasingly, companies are also working in product screenshots and other creative elements that help bring the story to life.
Personalization is a major focus for Hims & Hers, so the company shows momentum in subscribers utilizing personalized products as a key visual in its quarterly letter.
Snap also includes high-impact visuals in its letter. Since the revenue figures shared are tied to specific ad products, the company shows screenshots in action to make it easier for shareholders to comprehend what’s driving revenue and why.
The Evolving Nature of Shareholder Letters
Over time, the format and content of shareholder letters have evolved. Where once these letters were little more than dry financial recaps, they are now dynamic documents that reflect the company’s brand and values. In the past shareholder letters usually came once per year, but now, many companies are opting to distribute them monthly alongside quarterly earnings reports.
Improved distribution and accessibility
Companies are also improving their approach to distribution. While most companies host shareholder letters on their IR website, others push shareholders to sign up for quarterly newsletter alerts direct to their inbox. An example is Snap, which sends out a quarterly investor newsletter inclusive of IR and product updates.
In the example below, Siemens includes a strong call to action to “subscribe” alongside its quarterly letter.
To make information more accessible to more people, companies like Palantir translates its shareholder letters in multiple languages.
Brand Alignment & Design
Plain, text-heavy documents might work for Warren Buffett, but Berkshire Hathaway is the exception and not the rule in this case. In fact, Berkshire’s “anti-design” aesthetic has become its very brand.
Most IROs will want to look to companies like Duolingo, which have integrated vibrant visuals and product-related stories into their shareholder letters, making them not only informative but also visually appealing. Other examples include Rivian, Airbnb, Sonder, Hims & Hers, and Block, to name a few.
The big challenge when upleveling the design of your IR materials? Resources.
IR teams do not typically sit within the same area of the organization as marketing and creative teams do, and often do not have the same access to these resources in their own work streams. But this is all changing, as many companies that have recently gone public are clearly giving IR teams the creative resources they need.
The example from Airbnb almost looks like a print advertisement, but it’s actually just a well-designed page from a recent shareholder letter.
Executive Branding Opportunities
Shareholder letters are a great way for executives to show who they are as leaders. The tone and delivery of these letters give investors a sense of what the leader values and how they approach their role. It’s not just about company updates—it’s also about letting their personality and leadership style shine through.
For example, Morningstar’s CEO includes a reading list to give shareholders a sense of the topics he’s following, and what’s sparking his curiosity as of late.
Companies like Yelp, who have executives who have large ownership stakes in the companies themselves, use words like “fellow shareholders” to signal that there is alignment in incentives.
CEOs are also using shareholder letters to demonstrate leadership and company culture by thanking employees and teams for their hard work that lead to the latest results. See how Carvana worked this approach in to a recent letter below.
Finally, executives can use these letters to show appreciation for investors. A few words acknowledging shareholders can go a long way toward building stronger, more long-term relationships with investors.
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A great shareholder letter does more than report on a company’s financials—it serves as a critical tool in investor marketing. By focusing on clarity, transparency, and storytelling, companies can create shareholder letters that not only inform but also engage and inspire. As investor expectations continue to evolve, so too must the way companies communicate.
By mastering the art of the shareholder letter, companies can turn a simple communication into a powerful tool for building investor confidence and driving long-term growth.
Stakeholder Labs builds tools for modern organizations that want to up level their shareholder analytics and engagement to support long-term growth. Contact us to learn more.