Why an M&A thesis can be dangerous in a collapsing stock

Speculating on a takeover can be one of the riskiest ways to justify holding a deeply declining stock such as Lululemon $LULU.
A potential acquisition is not a substitute for a sound underlying business thesis. If no deal materializes, investors are left exposed to the company's operating performance and whatever deterioration originally drove the stock lower.
PayPal $PYPL provides a useful example. Investors spent years speculating that Stripe could eventually acquire the company, but that catalyst never materialized.
When a stock is already in a prolonged Stage 4 decline, relying on M&A can compound risk because the decline may last much longer than expected while the supposed catalyst remains entirely outside the investor's control.