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Goldman Sachs’ Stock Flakes After Q4 Profit Fell Short Of Expectations

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Shares of Goldman Sachs Group Inc (NYSE:GS) dropped after the firm’s profit was below analysts’ estimates. The release of Goldman Sachs’ fourth-quarter earnings report also revealed that its operating expenses soared 23% on higher pay for Wall Street workers.

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Q4 2021 hedge fund letters, conferences and more

Goldman Sachs' Q4 Report

According to CNBC, profit of the investment bank fell short of analysts’ expectations, with earnings per share hitting $10.81, below the $11.76 forecast. Goldman Sachs posted revenue of $12.64 billion against a $12.08 billion estimate.

Further profit for the fourth quarter slipped 13% to $3.94 billion from the same period last year. Analysts had forecast that a slump in trading would dent the quarterly results, as “equities desks posted revenue that was $300 million below the $2.43 billion estimate.”

Upon the release of the quarterly report, shares of Goldman Sachs dropped by 4.2% in premarket trading.

“Still, companywide revenue in the quarter jumped 8% from a year earlier to $12.64 billion, more than $500 million above the consensus estimate, on gains in investment banking and wealth management,” CNBC reports.


With regards to the 23% increase in operating expenses, Goldman Sachs —similar to JPMorgan Chase & Co (NYSE:JPM) and Citigroup Inc (NYSE:C)— paid more to workers in the shape of benefits as they beat company goals for the second year in a row.

Analysts surveyed by FactSet had expected operating expenses to hit $6.77 billion, but the 23% jump means the latter soared to $7.27 billion.

“Both trading and investment banking operations have thrived during the coronavirus pandemic, thanks to a booming period in capital markets that suited Goldman’s Wall Street-centric business model.”

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

Barclays PLC (LON:BARC)’s analyst Jason Goldberg had said in a note last week that Goldman’s CEO David Solomon could set new goals given the bank’s stellar performance, by adding: “Given it is tracking ahead of most of its medium term-targets, we wouldn’t be surprised if Goldman updates these targets on its 1Q22 earnings call or hints at an update later in the quarter.”