Shareholder Letter

What Is a Shareholder Letter?

A shareholder letter is a letter written by a firm's top executives to its shareholders to give a broad outline of the firm's operations consistently. The letter generally covers the firm's essential financial outcomes, its current position in the market, and a portion of its plans. It can likewise speak to specific events that have occurred consistently, changes in the company's stock price, or repeat parts of its vision. It's a chance for the executives of a firm to speak straightforwardly to shareholders. The shareholder letter is generally written one time each year and is incorporated toward the beginning of the firm's annual report and can typically be found in the investor relations section of a company's website.

Understanding Shareholder Letters

The shareholder letter can be a decent initial move toward getting a broad outline of a firm that you are dissecting for investment. Notwithstanding, it is important to comprehend that the shareholder letter, along with numerous different parts of the annual report, is typically written in a method for putting the company's operations in the best conceivable light. Investors will need to take the data in the shareholder letter with a grain of salt and make certain to dive all the more deeply into the firm's financial outcomes and perform independent research on the company and its industry before drawing ends. The letter might address specific things inside the company's financial statements or filings, for example, the 10-K or 10-Q, so it very well may be really smart to look for data inside these reports that validate claims made inside the shareholder letter.

Even accounting for potential skews or positive twists in a company's shareholder letter, the shareholder letter is as yet a significant resource in getting a feeling of the outlook of executives — basically the Chief Executive Officer's — of how well a company is doing. Commonly, investors will plunge deep into the shareholder letter to forecast or motivation behind why the firm is improving or more awful than anticipated.

Instances of Shareholder Letters

The shareholder letters of public corporations are accessible for investors and non-investors alike to see. Two of the most anticipated shareholder letters every year come from Warren Buffett's lucrative Berkshire Hathaway Inc. (BRK.A, BRK.B) company, as well as from online business goliath Amazon.com. For instance, the key takeaways from Warren Buffett 2019 letter incorporate guidance to zero in on the company's operating earnings, the power of long-term equities, and understanding the acquisition track record of the company.

In the mean time, in Amazon's 2020 shareholder letter, active CEO Jeff Bezos shared everything from the enrollment of its famous Amazon Prime service, to the value Amazon has made for different stakeholders. Intended to be a personal statement of sorts from company leadership to its shareholders, the shareholder letter from Jeff Bezos likewise incorporated a short story from his life to assist with delineating a business concept. Eventually, executives can impart anything that they feel is best to conciliate and satisfy its shareholders.

Features

• Commonly, a shareholder letter goes before the company's annual report or financial statements.
• A shareholder letter is a letter written by a firm's top executives to its shareholders to give a broad outline of the firm's operations consistently.