Navigating Market Volatility: A 2025 guide for Investor Relations

Uncertaintly has been the driver of financial markets over the last few months. While many investors may be scared, this actually poses a prime opportunity for Investor Relations professionals to provde their worth.

Stage Setting

The U.S. election cycle is always impactful for markets, and Donald Trump's unorthodox methods pose even more of a catalyst for action than usual. Whether you're considering betting markets going back to July of 2024, or wanting to start on election day to track equity indices, it's undeniable that we've seen historic levels of variance and volatility in markets. One week we hit all time highs due to exuberance around regulatory rollbacks, the next week we see shares sliding several percent due to concerns about reduced spending as a result of DOGE policy announcements. However, since April of 2025, there has been a clear step change. "Liberation Day" and the announcement of "reciprocal tariffs" has rocked the world, leaving pretty much every business scrambling to figure out their supply chain, and how this will impact their prices - both for inventory coming in and sales going out. This disruption to every supply chain in the world caused a bloodbath in the market, where we saw most stock prices fall over 10% within a week. Then, in a surprising shift, tariffs (with the exception of those targeting China) were put on a 90 day pause, causing markets to recover most of their losses since the initial announcement. While Zenith Analysis doesn't exist to make political claims, this has been a rocky time, and has likely damaged the United States' trade relationship with most countries. After all, who wants to invest years and millions of dollars into a new supply chain when the political machinations of the current administration can whipsaw by the day.

But Volatility isn't a 4 letter word

If we had to sum up the results of Trump's statements into a single word, it certainly wouldn't be "good," and we probably wouldn't use the word "disastrous" at this point. We would likely simply summarize the situation as "volatile." The most popularly used volatility index (VIX) peaked at a 52 week high of $65.73 - an over 400% increase over it's "steady state" of ~$15. While anyone that is trading purely on fundamentals would tell you that the market is in a considerably weaker position than it was a month ago, pricing doesn't necessarily reflect this reality. Investors want to continue the fantastic bull market we've seen over the last decade, and that provides opportunities for Investor relations professionals to capitalize. After all any quantitative trader worth their salt will tell you that some of the biggest years in finance come not from the market going up the most, but from the years that provide the biggest swings that they can capitalize on. While obviously not a real trading strategy, the idea is that if you can catch a 4% upswing, then short a 3% downswing, you may have just made 7% on a 1% swing. IR pros should apply a similar mindset - not in trading, but in their story telling.

The Role of Investor Relations

As investor relations professionals, we usually don't care much about the short term deviations. Our focus (and incentives) are instead based upon how everything "shakes out in the wash." So why should the short-term chaos matter? There are two components.

Firstly, it's an opportunity to build trust. Acknowledging challenges in your business is one of the most powerful way to improve your relationships, but this usually comes with the cost of undermining the perception of the underlying value of your company. Acknowledging challenges driven by macroeconomic circumstance helps you ride this trust-building line without doing any long term damage to your brand. When you're honest about these headwinds today, investors are more likely to believe in the company's solutions tomorrow.

Secondly, if you are able to spin a yarn about how your team is better equipped to navigate the volatility than your competitors, you can cause a rebalancing in your investor's portfolios. If you're a public company, your stock's performance really only matters in the context of the general market. If you're only down 2% when the rest of the market is down 5%, your IR function is just as successful as if you're up 10% when the market is up 7%! The idea here is that you want to pitch your company on the idea that you are the most efficient sailboat catching the waves of volatility. There may be some backslides, but you're going to leverage the experience to accelerate your pace.

Third, and perhaps most importantly, it's a great opportunity to lean into your preferred KPIs instead of financial drivers. You can act as a thought leader in your conversations with investors, and emphasize the things that make your company a strong player, even if there's some shifts in delivering cash. Pick a set of operational execution KPIs, highlight exceptional customer stories, and overshare on R&D successes. This positions your company as "in control" even if your stock is getting whipped around.

So I Should Be Making Money?

Not every business is going to be able to thrive under these circumstances. It's critical to recognize whether you're trying to "put your sails up" and ride the volatility for a positive, or if you're just trying to stop the bleeding. If your business is heavily reliant on Chinese supply chains, you're probably not going to come out of this smelling like roses. Your pitches with investors need to be focused on your historic strength of margins, your balance sheet "war chest" to get through the period of volatility, and the cost cutting exercises that your team is implementing to make it through this turbulence. The focus needs to get away from short term impacts, and instead on the stronger "machine" the executive team is building and the profitability that you will achieve when you come out on the other end. Make sure that you're setting appropriate expectations with your executive teams just as much as your investors. Equities likely won't be providing the same returns over the coming four years as they did in the prior five.

What do investors want to be hearing right now?

AI continues to be a hot button topic, with companies reporting new AI programs outperforming those that are not by roughly 3%. Investors also seem to be reacting to new strategies around cash flow management. Free cash flow optimization and driving down days of inventory outstanding is no longer rewarded as strongly as it was just six months ago. Talk about new currency hedging strategies, or operational expansions in new regions. Dropping the low-cost end of product offerings seems to be a strategy that is gaining ground, as analysts expect more room for margin in these product and services. Tax exposure is going to be a critical differentiator as companies shift to meet changing regulatory environments. If your treasury has an international cash management strategy, it may be a good time to get into those details with your investors.

It's critical to get your guidance issuance process right, as it will become a primary lever in your trust building exercise. Rather than focusing as much on how you stack up against current analyst views, it can be helpful to either widen ranges, or offer scenario-based guidance. For example, say "if X policy is passed, we would expect to see Y growth/shrinkage to our revenue." This is a critical to building the narrative that your executive team is remaining thoughtful and nimble in navigating this volatility.

In times of economic tightness, growth narratives will become secondary to operational efficiency. This may come in the form of cost cutting procedures, or simply a change in the mix in offerings weighted more toward services. Volatility tends to trigger a shift in investor composition and focus. You'll see moves from growth to value, and from retail to institutional. You can leverage tools like Zenith Analysis to create a compelling narrative on courting investors that may be looking for a flight to safety, or those that are high-beta opportunists. One area where we recommend caution: repatriating supply chains. While some companies are pursuing this route, it's often viewed as an overreaction. Our guidance to clients? Emphasize patience and preparedness rather than sweeping structural changes.