Despite Earnings Beat, Are There Growth Concerns at Goldman Sachs?

Bank vault with the door open

Bank vault with the door open

Shares of Goldman Sachs Group Inc. surged 1.2% in premarket trading Tuesday, after the investment bank reported second-quarter earnings and revenue that fell, but were well above expectations, and raised its dividend by 47%.

Goldman is aiming to generate $5 billion in new revenue by 2020.

Both revenue and earnings per share beat Wall Street estimates. Goldman also said it benefited from higher revenues in client execution including an improved performance in cash products and derivatives. As a group, sell-side analysts expect that Goldman Sachs BDC will post 1.99 earnings per share for the current fiscal year. This is lower by 2 per cent when measuring it against the same quarter of previous year, and 7 per cent higher than the first quarter of 2019.

A Raisin spokesperson confirmed to Xinhua that Goldman Sachs is obtaining "a small single-digit percentage" stake in Raisin, an online platform that connects customers and banks without access to private banking.

USA investment bank Goldman Sachs has invested 25 million euros (28.1 million US dollars) in the German fintech startup Raisin, the Berlin-based startup announced on Tuesday. The S&P 500 bank index ended the day 1% lower.

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The Goldman Sachs Group, Inc operates as an investment banking, securities, and investment management company worldwide. Year-to-date, Goldman's stock is up over 25%.

The going is slow. -China trade war and other economic uncertainties, sat out the second quarter.

Wall Street executives had warned that a slump in client activity would erode revenue from trading during the quarter. Uncertain investors tend to hunker down rather than risk a loss. Goldman Sachs Group posted sales of $9.40 billion in the same quarter last year, which suggests a negative year-over-year growth rate of 0.1%.

Solomon elaborated on this during a conference call with analysts Tuesday, saying that the firm still expects the United States economy to grow 2.5% this year and that the global economy will rise 3.4% - despite "subdued" growth in Europe. The bank did report higher lending to wealthy clients. Revenue rose 6% to $2 billion, versus a 12% drop at JPMorgan and a 9% decline at Citigroup. It is building better algorithms and technology that lets it match trades internally rather than routing to an exchange, which saves money.

Large investors have recently modified their holdings of the company. However, on a yearly comparison, it is lower by 5.6 per cent. The investment house said that it had $5.81 in earnings per share (EPS) and $9.46 billion in revenue.

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