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Finance: What is Sandbagging? 5 Views

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Description:

Sandbagging is the practice of keeping financial estimates conservative so that they are more likely to exceed expectations. We do a similar thing at work. Always under promise, always over deliver.

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Transcript

00:00
Finance a la shmoop what is sandbagging? want Wall Street to love you madam CEO [CEO appears on a balcony]
00:08
well what do you do you under promise and you over deliver you conveyed to the
00:14
street you'd be thrilled with earning $1 a share next year and when the year is
00:19
done you look back and note that you printed $1.30 meaning you actually [Man dazed appears with stack of cash]
00:24
earned a dollar 30 what did you do you sandbagged when a flood is imminent

00:28
people put bags of sand against the shores of rivers and lakes the idea is [A flooded living room appears]
00:33
that the sand absorbs the water and slows the flooding hopefully saving a
00:38
few basements along the way when a company sandbags they try to keep
00:42
estimates of financials extremely conservative they publish vastly
00:46
underwhelming numbers so that when the real numbers come in while the company [Newspaper of company earnings appear]
00:50
looks heroic by sandbagging they set the bar low like a two-foot tall hurdle so
00:56
that when they successfully leap over those hurdles with tons of clearance [A deer jumping over hurdles]
01:00
well they look like gazelles which unfortunately have been banned from
01:04
Olympic competition doping who would have guessed?
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