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Goldman Sachs (GS) Shares Drop 7%, Negating Record Earnings for 2021 and Q4

UTC by Steve Muchoki · 3 min read
Goldman Sachs (GS) Shares Drop 7%, Negating Record Earnings for 2021 and Q4
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Goldman Sachs reported net revenues of $59.34 billion and $12.64 billion in the 2021 and fourth quarters respectively.

Goldman Sachs Group Inc (NYSE: GS) shares closed Tuesday, January 18, 2022, trading at $354.40, down 6.97% from the day’s opening price. The American multinational investment bank and financial services company just reported its full-year and fourth quarter 2021 earnings results. Regardless of record earnings results for the year 2021 compared to 2020, hedge funds among other Goldman Sachs’ investors opted to partly sell their stake. Thereby the drop that has sustained this year’s profits.

According to market data provided by MarketWatch, Goldman shares have declined approximately 7.36% YTD. Additionally, GS stock has declined approximately 13.11%, 7.31%, and 9.20% in the past three months, one month, and five days respectively through Tuesday.

Notably, Goldman Sachs reported net revenues of $59.34 billion and $12.64 billion in the 2021 and fourth quarters respectively. Additionally, the company recorded earnings per share of $59.45 and $10.81 in the year 2021 and during the fourth quarter respectively.

However, according to media outlet CNBC, Refinitiv noted that analysts and investors estimated the company to report EPS of $11.76 in the fourth quarter and revenue of $12.08 billion.

Nevertheless, the company is well pleased with its performance compared to the previous year, 2020. Moreover, 2021 was a huge recovery from the 2020 coronavirus crisis that was widely unknown and spread huge fears around the world.

“2021 was a record year for Goldman Sachs. The firm’s extraordinary performance is a testament to the strength of our client franchise and people. Moving forward, our leadership team remains committed to growing Goldman Sachs, diversifying our businesses, and delivering strong returns for shareholders,” David M. Solomon, Chairman, and Chief Executive Officer noted in the earnings report.

Goldman Sachs Shares and the Market Outlook

From a high altitude perspective, Goldman shares are on the rise, up approximately 141% from Black Thursday, 2020 according to TradingView. Notably, Goldman shares traded below $150 in 2020 and currently oscillated around $354.50,

Inflation majorly caused by the Covid crisis has tightened most companies’ earnings in 2021, with the trend expected to continue in coming years.

Consequently, big corporations continue to cite inflation as a major stumbling block to their future growth prospects.

“Goldman Sachs’ disappointing Q4 earnings are a stark reminder that wage inflation is hitting the banking sector hard,” Octavio Marenzi, CEO of bank consultancy Opimas, said. “It is clear that employees are able to demand significantly higher pay.”

Goldman Sachs competitors including JPMorgan are feeling the heating effects too. The labor inflation, whereby employers are forced to pay their employees to avoid losing the best and competitive talents has significantly increased the heat in most companies.

“We’ve seen a somewhat elevated attrition and a very dynamic labor market, as the rest of the economy is seeing,” Barnum said. “It is true that labor markets are tight, that there’s a little bit of labor inflation, and it’s important for us to attract and retain the best talent and pay competitively.”

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Steve Muchoki

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