Goldman Sachs on Tuesday reported a 13 percent dip in profit as trading revenue slumped.
The quarterly results sharply missed analyst expectations, leading investors to file out of the company’s stock on Tuesday. Shares were down more than 8 percent in morning trade, to around $350 each.
The Wall Street giant on Tuesday posted $3.94 billion in profit, or $10.81 per share for the quarter ending Dec. 31 — far less than the $11.76 analysts predicted, according to Refinitiv data.
One bright spot was Goldman’s revenue, which beat expectations at $12.64 billion for the quarter — more than the $12 billion analysts expected.
The big dip in quarterly profit was tied to the company’s trading business, which typically brings in nearly a third of Goldman’s revenue, but dropped 7 percent during the quarter, with the global markets division bringing in $3.99 billion.
The decline in trading revenue was expected at all major banks as volatility from the coronavirus, which had caused huge swings in the market, slowed.
Goldman’s investment banking group, meanwhile, helped shore up earnings, jumping 45% and bringing in $3.8 billion as deal making, IPOs and M&A remain hot.
Goldman’s operating expenses took a bite out of the profits as costs surged 23% higher — stemming in part from the increasing cost of labor as the war for talent bids up the price of analysts and associates. The bank spent 31% more on compensation this year than last.
With a dizzying number of mergers, IPOs, spinoffs and other big strategic deals continuing to flow, keeping top performers happy is growing increasingly important.