Goldman Sachs reported second-quarter results on Tuesday that knocked the socks off investors’ expectations – and announced that it’s getting a new CEO. But the party atmosphere was killed somewhat by its stock falling by 1%.
What does this mean?
Goldman crushed expectations, growing its profit by 40% from this time last year. This was thanks in part to its investment banking division – which advises companies on mergers and acquisitions and helps them sell their stocks and bonds to investors – outdoing itself and bringing in 18% more moolah. This helped offset Goldman’s weaker-than-expected sales growth in its trading businesses – an area where competitor JPMorgan was making hay as investors bought and sold stocks there.
The bigger picture: There’s a new sheriff / DJ in town.
After 12 years at the top (and 36 at the bank in total), Goldman’s faithful CEO is going to be replaced with a newer model: a banker by day and DJ by night(tweet this). As the previous CEO’s been there so long, a change-up could well spark a new direction for the bank – like a turn to consumer-facing business (e.g. personal bank accounts and credit cards). This isn’t in Goldman’s current box of tricks, so it could be an expensive endeavor with a long wait for it to bring home the bacon.
Originally posted as part of the Finimize daily email.
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