Sandbag
Categories: Managed Funds, Banking
When a flood is imminent, people put bags of sand against the shores of rivers and lakes. The idea is that the sand absorbs the water and slows the flooding, hopefully saving a few basements along the way.
When a company sandbags, they try to keep estimates of financials pretty conservative. They publish underwhelming numbers so that, when the real numbers come in, the company looks that much better.
Want Wall Street to love you, Madame CEO? Underpromise. Overdeliver. You conveyed to the Street you’d be thrilled with earning a dollar a share next year. And when the year is done, you look back and note that you printed a dollar-thirty.
What’d you do? You sandbagged. When a flood is imminent, people put bags of sand against the shores of rivers and lakes. The idea is that the sand absorbs the water and slows the flooding, hopefully saving a few basements along the way.
When a company sandbags, they try to keep estimates of financials extremely conservative. They publish vastly underwhelming numbers, so that when the real numbers come in, the company looks heroic. By sandbagging, they set the bar low. Like a 2-foot-tall hurdle, so that when they successfully leap over those hurdles, with tons of clearance, they look like gazelles...which, unfortunately, have been banned from Olympic competition.
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Finance: What is Sandbagging?5 Views
Finance a la shmoop what is sandbagging? want Wall Street to love you madam CEO [CEO appears on a balcony]
well what do you do you under promise and you over deliver you conveyed to the
street you'd be thrilled with earning $1 a share next year and when the year is
done you look back and note that you printed $1.30 meaning you actually [Man dazed appears with stack of cash]
earned a dollar 30 what did you do you sandbagged when a flood is imminent
people put bags of sand against the shores of rivers and lakes the idea is [A flooded living room appears]
that the sand absorbs the water and slows the flooding hopefully saving a
few basements along the way when a company sandbags they try to keep
estimates of financials extremely conservative they publish vastly
underwhelming numbers so that when the real numbers come in while the company [Newspaper of company earnings appear]
looks heroic by sandbagging they set the bar low like a two-foot tall hurdle so
that when they successfully leap over those hurdles with tons of clearance [A deer jumping over hurdles]
well they look like gazelles which unfortunately have been banned from
Olympic competition doping who would have guessed?