Goldman doubles its profit and crushes earnings — but investors aren't celebrating
Get DJ D-Sol in here... Goldman Sachs is celebrating shockingly good earnings — good thing its CEO David Solomon (aka: DJ D-Sol) is tight with The Chainsmokers.
- Profit more than doubled last quarter compared to the same quarter a year earlier, clocking in at $4.5B — and a whopping $9.5B for the full 2020 year.
- And it's not thanks to your savings account... Investment banking revenues jumped 27% last quarter, while Equities revenues soared 40%.
On a scale of Main Street to Wall Street... Goldman is basically the show Billions (aka: Wall Street Extreme) — at least compared to retail-friendly banking peers like Citi, BoA, and even JPMorgan Chase. Apart from its Marcus savings account, Goldman doesn't really cater to us regular folks. Here are some of its big profit puppies:
- Investment Banking: Helping companies like Airbnb and DoorDash sell new shares in an IPO, making mergers/acquisitions happen, underwriting debt, and loans.
- Asset Management: Managing stock portfolios for pension plans, sovereign wealth funds, insurance companies, universities, and the mega-rich.
- Equities Trading: Making big transactions happen by buying/selling large positions in stocks. Goldman makes money from the bid/ask spread.
But investors don't really care about the past... They're obsessed with the future. Despite those expectation-crushing earnings, Goldman shares actually fell yesterday. Also yesterday: Biden picked Gary Gensler to lead the SEC. He's an ex-Goldman banker turned hardcore Wall Street regulator (known as one of the toughest under Obama). Gensler + a Dem-controlled Congress could mean more red tape to reign in Big Banks' power — and possibly Goldman's future profits.