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“Falling out of bed” in finance refers to an unexpected and rapid financial reversal that takes parties involved by surprise, such as sudden decreases in stock prices due to unanticipated events like key executive departures or cancelled mergers. Damage control can help slow and reverse the downward trend.
In financial circles, “falling out of bed” means that some kind of unexpected and rapid financial reversal has occurred. The imagery of the phrase indicates that the sudden reversal takes the parties involved by surprise, in the same way that a sleeping person is suddenly awakened by falling out of bed. There are a number of situations where one or more parties can fall out of bed, including sudden reversals in the value of investments and unanticipated events that lead to failed deals.
A common example is the sudden decrease in the price of a given stock option. For the stock to fall out of bed, the sudden fall occurs due to circumstances that are outside the scope of the forecasts made by experts about the future movement of the option. For example, if a key member of the executive team of the company issuing the shares must suddenly announce that he is leaving, and there was no prior anticipation of that event, the price per share may suddenly drop, creating a fall-out-of-bed situation. The downward trend may continue until a replacement is named, hopefully one that is trusted by investors and the business community at large.
A similar phenomenon can take place during the course of a merger or acquisition. Assuming the investment community views the business deal favorably, this may actually help bolster the stock of both companies as the merger or acquisition completion date approaches. If the deal is suddenly cancelled, the reaction in terms of the effect on stock prices can be swift and severe, creating a tendency to fall out of bed that continues for a period of time before the stock options of both companies stabilize and begin to rise once more.
In general, a fall out of bed situation means that something has gone terribly wrong and that the circumstances surrounding the sudden drop in stock prices came more or less as a surprise to everyone in the investment community. While situations like this happen from time to time, projecting all possible outcomes can help minimize the chance of reaching a deal only to collapse later on. Even when a bedfall situation develops due to events that were not fully anticipated, carrying out damage control can often help slow and eventually reverse the downward trend and restore fortunes and prices. the company’s shares at more attractive levels.
Smart Asset.
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