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AMC and Tesla show how earnings calls should be run

Yahoo Finance's Brian Sozzi explains what AMC and Tesla do right in their earnings calls and why other companies should take note.

Video transcript


JULIE HYMAN: AMC shares are sliding today after jumping in yesterday's session and in Friday's session, for that matter. We had a chance to speak with the company's CEO Adam Aron yesterday and learned-- or I guess reemphasized that he does things a little bit differently than most CEOs, including targeting his earnings call to retail investors. This is what he told us about it.

ADAM ARON: When I learned, much to my amazement, that 10,000 people we're listening to our earnings call via webcast, 10,000 people-- back in the good old days when we were institutionally owned, we didn't have 100 people on our calls. Well, all of a sudden, we had 10,000 people on our calls. So it made sense to talk directly to our shareholders in a forum where they were listening.


JULIE HYMAN: And that's--

BRIAN SOZZI: That's where you find my take for today because I'm going to piggyback on Adam Aron because I agree with him on this situation. I think it's time just to overhaul earnings calls. Now, a company's not required to hold an earnings call. It's just a trend that developed over many years. They are helpful.

But still, I think they could be more helpful because, by and large right now, we have AMC essentially holding an earnings call that is retail focused and a lot friendlier than what we hear from most companies on Wall Street. So here are a couple of my suggestions to other companies that might want to change their earnings calls because they probably should because of the rise in the retail investor. First up here, my first change, no review of the quarter by executives.

JULIE HYMAN: Oh, gosh, that canned thing at the beginning?

BRIAN SOZZI: It is awful. This thing sucks up 30 to 45 minutes and mostly involves CEOs, CFOs, and sometimes COOs patting themselves on the back and just rehashing everything that's on the press release. Do not care. Keep it moving. And my next point here, every analyst question should be followed by a retail investor question.

Now, provided that retail investor is actually confirmed to be an investor in the company, whether it's someone who likes the stock or someone who is betting against it, take that question right after the analyst because, to Aaron's point, what we didn't show there, he also made a very good point, most of these earnings calls are ridiculously boring and mostly involving analysts asking questions to improve their Excel modeling spreadsheet, and then they put out notes that most people, most human beings don't even understand what they're talking about.

And last but not least, the entire-- the entire executive team should hold an interactive chat the following day, either on Yahoo Finance, our various platform, YouTube or Twitch and get it full so investors, retail and institutional, get a sense of the entire team because I can't tell you how many times mistakes by the COO and all of his reports lead to big mistakes in earnings that the CEO and the CFO have to come out and justify. I want to see this whole team. I want to see their faces. I want to know what they're working on. If it's an over an hour, so be it, take questions, time to evolve.

JULIE HYMAN: The only thing I would say about this is-- and I think these are all good ideas to make this-- the whole process more understandable, but for the vast, vast majority of companies, the vast, vast majority of their investors are institutional investors. They're not individual people. So I don't know if this would be sort of a waste of time.

BRIAN SOZZI: Well, you make a very good point. Here's my take before-- because I know the team works very hard at the graphics for this. There I am in a Tesla stock going to an AMC movie. Why are AMC and Tesla the only ones showing they care about the retail investors?

And I see your point, Julia, you're right. I can't see GE coming out here, sleepy old GE with the CEO making tons and tons of money reinventing it's earnings call after decades of doing it one way. But still, even institutions should be paying attention to what retail investors are doing and give a damn about what they're doing with their trading account. It should matter, and it does matter.

BRAD SMITH: All right. The different type of retail investor that already has a little bit more insight into what the company is doing--


BRAD SMITH: --employees as well--

BRIAN SOZZI: Because they're using the products.


BRIAN SOZZI: They're in this AMC theaters. I can't tell you-- as a former analyst, you could become very disconnected from what the company actually does. And you know, it's unfortunate.

BRAD SMITH: All right. Was that a Model 3 Tesla that you had there?

BRIAN SOZZI: I can confirm that, yes.

BRAD SMITH: All right.