Though investors may be skeptical following reports of disappointing profits, Goldman Sachs Chief Executive Officer David Solomon told Reuters the bank is faring well.
"Good companies should invest and innovate and try new things. And by the way, when you do, you're not going to always get it right," Solomon said at the World Economic Forum's (WEF) annual gathering in Davos, Switzerland in January.
Playing down losses, Solomon focused on positive numbers. He told Reuters that average revenues are up 44% over a three-year period, constituting a 39% jump in book value per share since 2019.
By laying off thousands of employees, Solomon said the company was being “prudent.” It will also cut about $59 billion in asset management investments that weighed on earnings.
However, one unit of the bank lost $3 billion over three years, and dealmaking declines have hindered profit estimates, so investors remain dubious, according to Reuters.
David Konrad of Keefe, Bruyette & Woods, an investment banking firm headquartered in New York City that specializes exclusively in the financial services sector, was one of several analysts who recently cut Goldman's share price target, saying it suffered from "a perfect storm of declining revenues in a challenging market."
The idea of buying the stock on expectations of a higher price-to-earnings ratio "is really, really hard right now," UBS analyst Brennan Hawken said.
Goldman shares are up 3.6% over the past year, though, outpacing the S&P 500 banking index.
Solomon has tried to diversify the firm beyond trading and investment banking since assuming leadership in 2018. But those divisions accounted for 69% of revenues in December compared to 58% when Solomon took over. He has also promoted the retail banking business Marcus, which stumbled while attracting more than $100 billion in deposits.
The bank scaled back plans for Marcus in October, moving it to the newly-merged asset and wealth division. Part of the business shifted into a new unit called platform solutions, which oversees transaction banking, credit cards, and financial technology.