Goldman Sachs has taken heavy losses from high-profile investments in WeWork and Uber Technologies, contributing to falling quarterly revenue and profit.
Revenue at three of its four major businesses declined, the bank reported on Tuesday. Net revenue at Goldman’s investing and lending division slumped 40 per cent as it swallowed a loss of about $80m (£63m) on its stake in WeWork owner The We Company, along with hits from investments in Uber and two other companies.
The valuation of WeWork, an office-sharing startup, has plummeted from a peak of $47bn in January to as low as $10-12bn, forcing it to pull its IPO. Meanwhile, Uber’s shares are down 24 per cent since the company went public earlier this year.
The only bright spot for Goldman was its institutional client services business, which accounts for more than a third of its overall revenue, but 6 per cent growth at the unit was not enough to offset weakness in other major businesses.
“Overall, GS posted mixed results this quarter,” analysts at Keefe, Bruyette & Woods said in a note to clients.
Wall Street’s biggest banks are facing several challenges in growing their revenue, largely as a result of a weakening global economy.
Under chief executive David Solomon, Goldman has undertaken a major shift in strategy. It is moving away from its focus on trading to building a bigger consumer business in a bid to shield its revenue from wild swings in financial markets. Mr Solomon has been in charge since October 2018 and is known for his hobby of spinning records at nightclubs under the handle DJ D-Sol.
Goldman, which recently launched a credit card with Apple, has also attempted to build out new businesses, but top executives at the bank have warned in previous quarters that those efforts will take time to bear fruit.
At the same time, Mr Solomon is conducting a full-scale review of the business that has led to a culling of its partnership pool of top executives.
The bank’s earnings per share fell to $4.79 in the quarter ended on 30 September from $6.28 a year earlier.
Total net revenue fell 6 per cent to $8.32bn.
© Reuters
