Goldman Sachs' profit plunges a whopping 58% in second quarter

Published

2 years ago

July 28, 2023

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Goldman Sachs on Wednesday said earnings fell by a whopping 58% in the second quarter as the Wall Street giant blamed a retreat from consumer businesses and declining investment values for its worst results in three years.

The dreadful performance still managed to fall short of Wall Street estimates — even after Goldman boss David Solomon warned analysts in the run-up to the earnings release that they should lower their expectations.

Goldman reported that it earned $3.08 a share — lower than the $3.18 analysts had predicted.

The bank’s revenue plummeted 8% to $10.9 billion, according to the report.

“This moment in the economic cycle creates meaningful headwinds for Goldman Sachs,” Solomon told analysts on a conference call. “We are making tough decisions that are driving the strategic evolution of the firm. Given both these factors, it should come as no surprise that we’re going to a period of lower results.”

Solomon did highlight seeing positive signs on the horizon in investment banking.

“It definitely feels better over the course of the last six, eight weeks,” Solomon told analysts on a conference call. “This is obviously a tough quarter,” but he added “the environment feels better.”

He cited activity picking up in equity capital markets and a revival of client discussions on mergers and acquisitions.

Goldman shares closed up 1% at $340.55.

“The bar was relatively low heading into the quarter,” wrote Citigroup analyst Keith Horowitz. “When we compare the results against our estimates, we find that core trends were generally positive,” helped by equities financing and investment banking.

The results were the bank’s worst since the second quarter of 2020, when it took writedowns over a corruption scandal linked to Malaysian state fund 1MDB.

Goldman took a $504 million hit tied to its GreenSky business, which facilitates home improvement loans to consumers, and $485 million related to its real estate investments.

Goldman agreed to acquire GreenSky for $2.2 billion in 2021 and later closed the deal at $1.7 billion.

The bank also took $615 million in credit losses including writedowns related to its consumer loans and business.

Goldman’s Marcus unit was also folded into its merged asset and wealth management arm last year, as the investment bank began pulling back from retail banking.

Goldman’s terrible quarter looked even worse compared to rivals JPMorgan Chase, Bank of America and Morgan Stanley, which all reported strong earnings in the past week.

JPMorgan announced it raked in $14 billion in profit in the second quarter despite CEO Jamie Dimons dire predictions for the economy, which has been saddled with sky-high levels of inflation in recent years.

Goldman’s results are likely to ratchet up pressure on Solomon, whose leadership and management style have been called into question by partners and rank-and-file employees.

Last month, The Post was the first to report that Goldman’s board was beginning to re-evaluate Solomon in the wake of an exodus of top talent from the Wall Street firm.

Since Solomon took the helm in 2018, Goldman partners have complained over their skimpy bonuses, his costly venture into consumer banking, and his side hustle as a DJ.

With Post wires

Politics

DeepSeek — a wake-up call for responsible innovation and risk management

Published

3 hours ago

February 6, 2025

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DeepSeek — a wake-up call for responsible innovation and risk management

DeepSeek R1’s rise shows AI’s promise and peril — cost-effective yet risky. Privacy, bias and security flaws demand responsible AI now.

US

Israel leans hard into Trump plan for Gaza – but has anyone asked its people?

Published

3 hours ago

February 6, 2025

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Israel leans hard into Trump plan for Gaza - but has anyone asked its people?

Donald Trump is not a man in the habit of backing down.

His astonishing proposal to “own” Gaza and relocate two million Palestinians has faced unanimous opposition from America’s allies, but the president now has a plan and woe betide anyone who gets in the way. And that includes international law.

“The Gaza Strip would be turned over to the United States by Israel at the conclusion of the fighting,” he wrote on Truth Social.

Trump latest: Netanyahu backs ‘remarkable’ Gaza idea

Nevermind that Gaza is not Israel’s land to turn over.

“The Palestinians… would have already been settled in safer and more beautiful communities, with new and modern homes, in the region.”

Nevermind that most countries in the region have angrily opposed this suggestion.

Aware, perhaps, that the prospect of US troops being sent to Gaza, possibly for decades, would meet opposition in Congress, Trump added “no soldiers by the US would be needed!”

Well that clears one question up. But who would be responsible for security in Gaza then?

Local police officers who are affiliated to Hamas? Private security contractors made of former American soldiers, operating under rules of engagement set by who?

While most of the world is recoiling at all this, in Israel they are leaning into it. Hard.

The defence minister, Israel Katz, has ordered the IDF to prepare plans to allow Gazans to leave by land, sea or air. This is being framed as voluntary migration, giving Gazans the freedom to leave for a better life elsewhere.

Some might. But what if most don’t. Then what?

Voluntary migration sounds nice and all, but how voluntary would it be, really?

Palestinians, human rights organisations and others argue that after 15 and a half months of constant bombardment, Israel has left Gaza uninhabitable and so any departure would be down the barrel of guns that have been pointing at them for almost a year and a half.

Faced with all this, Trump, Netanyahu and their ministers continue to insist that only they know what’s best for Gazans.

Has anyone actually asked the people of Gaza?

Environment

Tesla sales crash in another market and this time, it can’t blame Model Y

Published

3 hours ago

February 6, 2025

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Tesla sales crash in another market and this time, it can't blame Model Y

Australia is the latest market to report a significant drop in Tesla sales for the first month of 2025, and in this case, the automaker can’t blame the Model Y changeover.

Earlier this week, we reported on European markets releasing car sales data for January, showing a massive drop in Tesla sales.

Tesla sold roughly half as many cars in Europe in January 2025 compared to January 2024.

Most industry watchers agree that there are two main reasons behind the sharp decline:

Elon Musk’s meddling in politics and spreading misinformation on social media is driving people away from Tesla
Tesla is transitioning Model Y production to the new design, which is affecting production and sales

Now, Australia is reporting its car sale numbers for January 2025, and it shows that Tesla is also having issues in this market.

In the first month of 2025, Tesla delivered only 739 vehicles – down 33% year-over-year.

This time, Tesla can’t blame the Model Y changeover as Model Y deliveries were actually up 20%.

Model 3 is the problem. Sales of Tesla’s cheapest model were down 63%.

This has been Tesla’s trend in Australia for the last year. In January 2023, Tesla delivered more than 2,000 vehicles in the country, but now it can only deliver a few hundred units. In 2024, Tesla’s sales dropped 17% for the whole year.

Electrek’s Take

At this point, it’s fairly clear that Tesla’s sales will be abysmal in Q1. Tesla will use the excuse of the Model Y changeover, and it will undoubtedly be partly true, but I think the Elon effect is also be a significant part of Tesla’s sales problem.

Unfortunately, it’s impossible to calculate, but in the case of Australia, we can see that it’s part of the problem with the model breakdown.

Australia is not a huge car market and it won’t have a major impact on Tesla, but the trend appears to be similar in most markets.

The US is the biggest wildcard, as Elon still has a lot of fans there, obviously. US data is a bit more opaque and it will take a while for us to see an impact, if any.

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