Goldman Sachs announced better-than-expected results today, pushing the stock up 4% during the pre-market trading. Since then, sentiment has deteriorated, erasing some of the gains.
Goldman reports solid numbers
As we come to the end of the big banks’ Q3 quarterly earnings, a few were frustrating (MS), some were lackluster (JPM, Citi, and Wells), and some were phenomenal (BofA). Just now, Goldman Sachs reported a 43% Y/Y decline in Q3 profits as the Wall Street powerhouse suffered from a persisting downturn in investment banking fees and asset management income, offset by a rise in trading profits.
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Nevertheless, Goldman will consolidate its trading and investment banking businesses into one entity as it reduces from four to three divisions, according to CEO and sometimes DJ David Solomon (D-Sol).
The renowned investment bank surpassed expectations by over 10%, earning $8.25 per share (GAAP) as opposed to the average estimate of $7.51.
Goldman’s EPS was higher than the $7.73 achieved in Q2 but far lower than the $14.93 generated in the extravagant bull market of 2021. The actual revenue of $11.98 billion exceeded the $11.5 billion consensus estimate.
$1.58 billion in investment banking income fell 57% year over year. The net revenue for Global Markets increased by 11% year over year, whereas the revenue for its Equities segment decreased by 14%. Wealth Management sector revenue remained stable, although consumer & wealth management sales of $2.38 billion increased 18% YOY. Revenue for the Consumer Banking sector fell 12% from the previous year.
“Against the backdrop of uncertainty and volatility in the markets, we continue to prudently manage our resources and remain focused on risk management as we serve our clients,” CEO Solomon said in a statement.
A reorganization of its business segments, including Asset & Wealth Management, Global Banking & Markets, and Platform Solutions, was also announced by the bank.
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“We are confident that our strategic evolution will drive higher, more durable returns and unlock long-term value for shareholders,” Solomon added.
Testing downward trendline
Technically speaking, the price is now testing a medium-term downtrend line, seen near 323 USD. If the stock manages to climb above, we might see further gains toward the 200-day average at around 328. But more importantly, the medium-term outlook could change to bullish in that scenario.
On the downside, the support should be at 312 USD, while in a bearish scenario, we might see a full closure of today’s bullish gap, i.e. a decline to 307 USD.