Goldman’s Gs Apple Card Business Has A Surprising Subprime Problem

For added perspective, note that out of the 27 Wall Street analysts that cover the stock, 63% of them either have a ‘Buy’ or ‘Outperform’ rating, with the remaining 37% comprising of ‘Hold’ ratings, with no ‘Sell’ ratings whatsoever. Forex The average analyst price target also works out to $391, implying potential upside of over 20% from current price levels. Then we shift to the forward P/BV which is the more appropriate valuation metric when gauging banks.

Goldman Sachs stock

The Fed has raised its benchmark fed funds rate four times this year to a range of 2.25% to 2.5%. At Jackson Hole, Powell signaled the possibility that interest rates will run higher for a longer period of time, a prospect that will weigh on equities, the Goldman Sachs strategist said. “As investors process new information and adjust expectations accordingly, it would be unusual if there were never rallies within bear markets,” they wrote in a commentary. Goldman’s credit card business, anchored by the Apple Card since 2019, has arguably been the company’s biggest success yet in terms of gaining retail lending scale.


Furthermore, Goldman Sachs CFO David Viniar stated that CEO Blankfein had never “met” with his predecessor and then-US Treasury Secretary Henry Paulson to discuss AIG; however, there were frequent phone calls between the two of them. Morgan Stanley was hired by the Federal Reserve to advise on the AIG bailout. In September 2022, Goldman Sachs announced the layoff of hundreds of employees across the company, apparently as a result of the earnings report from July the same year that showed significantly reduced earnings. Goldman Sachs was embroiled in a major scandal related to Malaysia’s sovereign wealth fund, 1Malaysia Development Berhad . The bank paid a fine of $2.9 billion under the Foreign Corrupt Practices Act, the largest such fine of all time.

As noted in the previous section, the valuation picture of GS isn’t overly compelling. Besides, whilst the stock’s yield facet looks attractive, one should also consider that in the current market environment, the bank’s core businesses will find it hard to flourish. Finally, also consider how GS’s stock is positioned relative to its peers in the financials space, as represented by the Vanguard Financials ETF . Whilst this ratio no longer looks overbought, it still trades well above the mid-point of this range, implying sub-optimal risk-reward for those viewing GS as a prospective rotational opportunity in the US financials space. The potential scenario in which the Fed gets more aggressive with its rate hikes signals to investors that as difficult as the year-to-date declines have been in the stock market, they could get a lot worse. The stock market could still have significant downside from current levels if the Federal Reserve gets more aggressive with its interest rate hikes as it attempts to tame rising inflation, according to Goldman Sachs.

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Goldman Sachs was charged for repeatedly issuing research reports with extremely inflated financial projections for Exodus Communications and Goldman Sachs was accused of giving Exodus its highest stock rating even though Goldman knew Exodus did not deserve such a rating. On July 15, 2003, Goldman Sachs, Lehman Brothers and Morgan Stanley were sued for artificially inflating the stock price of RSL Communications by issuing untrue or materially misleading statements in research analyst reports, and paid $3,380,000 for settlement. Starting in 2016, Goldman Sachs has started to move into consumer financial products after spending most of its prior 150 years catering to institutional investors, corporations and governments. Under the direction of Senior Partner Stanley R. Miller, the firm opened its first international office in London in 1970 and created a Private Wealth Management division along with a fixed income division in 1972. It pioneered the “white knight” strategy in 1974 during its attempts to defend Electric Storage Battery against a hostile takeover bid from International Nickel and Goldman’s rival, Morgan Stanley.

“Goldman has to play in a broader credit spectrum than other banks, that’s part of the issue,” said a person who once worked at the New York-based bank, who asked for anonymity dotbig to speak candidly about his former employer. “They have no direct-to-consumer offering yet, and when you have the Apple Card and the GM card, you are looking at Americana.”

  • The clients willingly complied with these demands because they understood it was necessary in order to participate in further such undervalued IPOs.
  • However, it has an opportunity to draw in new depositors in with intriguing financial technology, partnerships with tech heavyweights like Apple , and its trusted brand.
  • Despite the latest quarterly earnings season revealing a painful financial hangover from China’s disruptive Covid-19 lockdowns, tech companies stillbeat the Street’ssales expectations and profit estimates.
  • Under the direction of Senior Partner Stanley R. Miller, the firm opened its first international office in London in 1970 and created a Private Wealth Management division along with a fixed income division in 1972.

Here is a performance summary of all stocks in previous market crashes. Valuations have been hit even harder this year, according to Goldman Sachs. The S&P 500’s price-to-earnings (P/E) ratio has declined 22% in 2022 to 16x as rates and inflation have risen, Kostin noted, and a further drop is likely as the Fed continues to tighten fiscal policy. Real-time analyst ratings, insider transactions, earnings data, and more. 811 employees have rated The Goldman Sachs Group Chief Executive Officer David M. Solomon on David M. Solomon has an approval rating of 91% among the company’s employees.

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Goldman Sachs seems to create the most significant positive value in categories “Taxes”, “Distributing knowledge”, and “Nutrition”. The positive contribution in the “Distributing knowledge” impact category is mostly driven by its “Market and investment data services”, “Securities brokerage services”, and “Commodity brokerage services” products. The Goldman Sachs Group has a short interest ratio (“days to cover”) of 2.1, which is generally considered an acceptable ratio of short interest to trading dotbig review volume. 1.47% of the outstanding shares of The Goldman Sachs Group have been sold short. The Goldman Sachs Group has been the subject of 8 research reports in the past 90 days, demonstrating strong analyst interest in this stock. The company’s average rating score is 2.50, and is based on 8 buy ratings, 5 hold ratings, and 1 sell rating. I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours.

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When it arrives, investors will find out if the US central bank raised interest rates by 75 basis points (0.75 percentage points), which would hurt stocks, or 100 basis points, which would be even worse. You should speak with your personal stockbroker about purchasing any stock in an IPO. You cannot purchase any securities from Goldman Sachs unless you already have an account with us.

Other banks also tend to be more aggressive in seeking to recover debt, which improves competitors’ net charge-off figures, the people said. The biggest reason is because Goldman’s customers have been with the bank for less than two years on average, according to people with knowledge of the business who weren’t authorized Forex to speak to the press. CEO David Solomon will likely face questions from directors about the consumer business at a board meeting later this week, according to people with knowledge of the matter. Ten-year Treasury yields should hit 3.3% in nominal terms and 0.5% in real terms under Goldman’s base scenario.

The dismal performance leads to bearish investor sentiments as the stock plunges 5.6%. Supported by world-class markets data from Dow Jones and FactSet, and partnering with Automated Insights, MarketWatch Automation brings you the latest, most pertinent content at record speed and with unparalleled accuracy. © 2022 Market data provided is at least 10-minutes delayed and hosted by Barchart Solutions. Information is provided ‘as-is’ and solely for informational purposes, not for trading purposes or advice, and is delayed. To see all exchange delays and terms of use please see Barchart’s disclaimer. Stockholders of record on Tuesday, July 26th will be paid a dividend of $2.50 per share on Wednesday, August 10th. The company is scheduled to release its next quarterly earnings announcement on Friday, October 21st 2022.

Charge-off rates tend to be highest during the first few years a user has a card; as Goldman’s pool of customers ages and struggling users drop out, those losses should calm down, the people said. The bank leans on third-party data providers SG to compare metrics with similar cards of the same vintage and is comfortable with its performance, the people said. The profile of Goldman’s card customers actually resembles that of issuers known for their subprime offerings.