GS - The Goldman Sachs Group, Inc.

NYSE - Nasdaq Real Time Price. Currency in USD
237.77
-4.15 (-1.71%)
As of 10:32AM EST. Market open.
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Previous Close241.92
Open236.37
Bid237.58 x 900
Ask237.68 x 1000
Day's Range235.01 - 238.54
52 Week Range180.73 - 250.46
Volume626,216
Avg. Volume2,437,498
Market Cap84.193B
Beta (5Y Monthly)1.37
PE Ratio (TTM)11.31
EPS (TTM)21.03
Earnings DateApr 12, 2020 - Apr 16, 2020
Forward Dividend & Yield5.00 (2.04%)
Ex-Dividend DateFeb 27, 2020
1y Target Est263.57
  • Oil Falls to Three-Month Low as Virus Spread Raises Demand Fear
    Bloomberg

    Oil Falls to Three-Month Low as Virus Spread Raises Demand Fear

    (Bloomberg) -- Oil tumbled to the lowest in more than three months on fears China’s deadly coronavirus will hit demand in a market that already has plentiful supply.Futures plunged more than 3% as China reported an increase in fatalities and infections. While the country extended the Lunar New Year holiday to control the outbreak, more cases have been reported in other parts of the world. Goldman Sachs Group Inc. predicted that global oil demand may fall, but Saudi Arabia said it believes the crisis so far will have a “very limited impact” on consumption.The virus is the latest upheaval for the oil market, which has been struggling with demand concerns for months. Investors are selling crude and other commodities amid a broad withdrawal from riskier assets and fears the virus will curtail fuel consumption as travel is restricted.“A supply glut of fuel in China would filter through to the rest of the world through exports and on that basis the market is reacting in this defensive manner,” said Ole Hansen, head of commodity strategy at Saxo Bank A/S. “The Saudis can try to stem the sell-off but while it’s being driven by the need to mitigate losses that will be difficult to control.”Brent futures lost as much as 3.6% to $58.50 a barrel on the London-based ICE Futures Europe exchange and traded at $58.95 as of 1:36 p.m. local time. The contract slid 6.4% last week, capping the longest run of weekly losses since June. West Texas Intermediate fell as much as 3.8% to $52.13.Hedge funds boosted bullish bets on WTI by 2.8% in the week ended Jan. 21, the most in a month, a day before prices tipped into the worst three-day slump since September.Saudi Energy Minister Prince Abdulaziz bin Salman said the world’s largest oil exporter was monitoring the virus’s impact both on the Chinese economy and the oil market. Yet, he said that the same “extreme pessimism” that’s afflicting the market also occurred in 2003 during the SARS outbreak, “though it did not cause a significant reduction in oil demand.”“The current impact on global markets, including oil and other commodities, is primarily driven by psychological factors and extremely negative expectations adopted by some market participants despite its very limited impact on global oil demand,” the minister said in a statement.See also: Viral China: Behind the Global Race to Contain a Killer BugGlobal oil demand may slip by 260,000 barrels a day this year and could shave almost $3 from the price of a barrel of crude, Goldman Sachs said last week, using the 2003 SARS epidemic as a guide.China extended the Lunar New Year holiday by three days until Feb. 2, while companies in Shanghai have been asked not to start work until at least Feb. 9. The death toll in the country climbed to at least 80 so far with more than 2,700 confirmed cases of infection. Canada confirmed its first case while the U.S. announced a fifth, as the virus spread to at least 15 countries and territories.\--With assistance from Javier Blas and Saket Sundria.To contact the reporters on this story: Rakteem Katakey in London at rkatakey@bloomberg.net;Aaron Clark in Tokyo at aclark27@bloomberg.netTo contact the editors responsible for this story: James Herron at jherron9@bloomberg.net, Rakteem Katakey, Amanda JordanFor more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.

  • Financial Times

    Goldman Sachs: will Solomon’s consumer gamble pay off?

    Goldman Sachs spent most of its first 130 years shrouded in the secrecy of a partnership structure. It is effectively a coming-out party for a group that has spent the past two years planning a radical overhaul of its operations as it moves from its trading and investment banking roots to an institution offering everything from current accounts to money management and credit cards for the masses. Mr Solomon’s decision to pull back the veil and explain Goldman’s strategy is anything but.

  • Financial Times

    Platforms vie to become the connective tissue of Wall Street

    In recent years trading has become highly automated, relying on huge amounts of data coursing down the fibre-optic wires that link fund managers to banks and exchanges. As the linking became a bigger draw, OpenFin became a competitor.

  • Barrons.com

    Buy Innovative Growth Companies Like BioMarin and L3Harris, Abby Joseph Cohen Says

    Among the stock picks that Barron’s 2020 Roundtable panelist Abby Joseph Cohen chose are companies whose growth comes from innovation, businesses with good growth in free cash flow, and valuations that reflect any problems they may have had.

  • Oil Posts Worst Week in a Year as Virus Selloff Deepens
    Bloomberg

    Oil Posts Worst Week in a Year as Virus Selloff Deepens

    (Bloomberg) -- Crude posted the worst weekly decline in more than a year on concern that the spread of China’s coronavirus will cripple fuel demand. Brent futures sank 2.2% in London on Friday. Deaths from the coronavirus rose to at least 26 and China expanded travel restrictions for about 40 million people in an attempt to halt contagion. The U.S. is monitoring more than 60 people for potential infection and lawmakers said health authorities are expected to confirm a third case.The Asian virus has spooked traders even as the World Health Organization stopped short of declaring a global health emergency. The contagion is disrupting travel during the Lunar New Year holiday, when hundreds of millions normally fly or ride home. The selloff has accelerated as trend-following funds turned bearish, according to TD Securities.“Contagion fears are spiking ahead of the biggest yearly migration ahead of new year,” said Daniel Ghali, a commodities strategist at TD Securities. “The fear factor is the risk of contagion, synonymous to what happened in 2003 with SARS which led to a 2% drop in Chinese economic growth.”The fast-spreading virus is the latest challenge for a market that’s been buffeted this year by geopolitical turmoil in the Middle East and North Africa, as well as the phase-one trade deal between Beijing and Washington. Goldman Sachs Group Inc. said earlier this week that, if the coronavirus has an impact similar to the 2003 SARS epidemic, demand could be curbed by 260,000 barrels a day. While this is not the first time global oil markets contend with an epidemic threatening demand, the current supply environment could worsen the situation.“The slightest fear of any economic slowdown will spur a long wave of liquidations because the market is so oversupplied,” said Walter Zimmermann, chief technical strategist at ICAP Technical Analysis.Some businesses in China including McDonald’s Corp. and Starbucks Corp. temporarily shut some stores in efforts to contain the virus.See also: China’s Economy Was Brightening This Month Before Virus Fear HitBrent crude for March settlement fell $1.35 to settle at $60.69 a barrel on the ICE Futures Europe exchange in New York putting its premium over WTI for the same month at $6.50 a barrel. Brent futures fell 6.4% this week.West Texas Intermediate futures for March delivery slipped $1.40 to end the session at $54.19 a barrel on the New York Mercantile Exchange, the lowest level since October. Meanwhile, based on the commodity’s relative strength index, WTI is sitting in oversold territory and is due for a rally.Options traders are paying the most since Oct. 31 for protection against price swings, according to the CBOE/CME WTI volatility index.\--With assistance from James Thornhill, Grant Smith and Saket Sundria.To contact the reporter on this story: Jackie Davalos in New York at jdavalos10@bloomberg.netTo contact the editors responsible for this story: David Marino at dmarino4@bloomberg.net, Jessica Summers, Mike JeffersFor more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.

  • Goldman's Diversity Pledge Won't Apply to Boards in Asia
    Bloomberg

    Goldman's Diversity Pledge Won't Apply to Boards in Asia

    (Bloomberg) -- As Goldman Sachs Group Inc. moves to increase diversity on corporate boards, the investment bank isn’t extending the initiative to a particularly challenged region: Asia.Chief Executive Officer David Solomon revealed this week that starting in July the bank won’t handle initial public offerings for companies that lack either a female or diverse director. But the rule applies only to IPOs in the U.S. and Europe. Asia’s exclusion is striking, given how common all-male boards are in the region. Other bastions of male dominance, including Latin America and the Middle East, also went unmentioned.A Goldman spokeswoman said the bank will consider implementing the plan in Asia and other regions over time after consulting with its clients, as diversity awareness improves in those areas and that it will consult with its clients in those areas to improve board diversity.“Nowadays there’s no excuse for companies to have non-diverse, all-male boards,” said Fern Ngai, CEO of Community Business, a Hong Kong-based group that advocates for responsible and inclusive business practices. Goldman “should include Asia. I don’t see why they don’t.”Goldman is initially targeting regions where corporations have come further in making women a part of top-level decision-making. In California, new legislation mandates board diversity, with fines for noncompliance. Asia lags behind not just the U.S. and Europe, but also global leader Africa in the proportion of women on company boards, McKinsey Global Institute reported late last year.A study by index provider MSCI Inc. of companies in its global benchmarks last month showed about 33% of firms in Japan had no female board members, one percentage point worse than China and Hong Kong. By comparison, that figure was 1% in the U.S., while it was 94% in Saudi Arabia.Recent high-profile IPOs in Asia showed a paucity of female representation, with no women on the boards of Xiaomi Corp. and Meituan Dianping, which raised almost $10 billion combined in 2018. Goldman had a leading role in both those offerings.The bank was the biggest underwriter of IPOs in the U.S. and Europe last year. It had a more modest market share in Asia, coming in 19th, according to Bloomberg league tables. Goldman was an adviser on 86 IPOs in 2019, ranking sixth globally among underwriters.Last May, Hong Kong’s stock exchange issued a non-binding guidance letter to new IPO applicants, asking them to disclose their board-diversity policies and give an explanation if their directors are all of a single gender.\--With assistance from Zhen Hao Toh and Jeff Green.To contact the reporters on this story: Kiuyan Wong in Hong Kong at kwong739@bloomberg.net;Julia Fioretti in Hong Kong at jfioretti4@bloomberg.net;Cathy Chan in Hong Kong at kchan14@bloomberg.netTo contact the editors responsible for this story: Candice Zachariahs at czachariahs2@bloomberg.net, Jonas Bergman, Daniel TaubFor more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.

  • Zacks Earnings Trends Highlights: JPMorgan, Wells Fargo, Bank of America, Citigroup and Goldman
    Zacks

    Zacks Earnings Trends Highlights: JPMorgan, Wells Fargo, Bank of America, Citigroup and Goldman

    Zacks Earnings Trends Highlights: JPMorgan, Wells Fargo, Bank of America, Citigroup and Goldman

  • Goldman to Refuse IPOs If All Directors Are White, Straight Men
    Bloomberg

    Goldman to Refuse IPOs If All Directors Are White, Straight Men

    (Bloomberg) -- The era of the white, all-male board is coming to an end.Goldman Sachs Group Inc. Chief Executive Officer David Solomon issued the latest ultimatum Thursday from Davos. Wall Street's biggest underwriter of initial public offerings in the U.S. will no longer take a company public in the U.S. and Europe if it lacks a director who is either female or diverse. Asia is not yet included in the firm’s new policy.The mandate is the latest in a series of signals that non-diverse boards and management are unacceptable. BlackRock Inc. and State Street Global Advisors are voting against directors at companies without a female director. Public companies with all-male boards based in California now face a $100,000 fine under a new state law. “It’s what big investors are looking for these days,” said Fred Foulkes, a management professor at the Boston University Questrom School of Business. “If the board has all white males, that’s a big negative.”Goldman Sachs acknowledged that “diversity” has other meanings around the world — including in Asia, where racial dynamics are different and gender disparities are sometimes even more glaring. The company said in a statement Friday that it intends to eventually expand its board-diversity mandate beyond the U.S. and Europe.The corporate board has become a rare bright spot for gender and racial diversity at the highest echelons of corporate America. Almost half of the open spots at S&P 500 companies went to women last year, and for the first time they made up more than a quarter of all directors. In July, the last all-male board in the S&P 500 appointed a woman. Still, new boards are less diverse: Among the top 25 IPOs by value each year from 2014 through 2018, 10 companies had no female directors, said Malli Gero, co-founder and senior adviser to 2020 Women on Boards, an organization that pushes for the Russell 3000 index to have at least 20% women directors on its boards. Last year, Goldman Sachs was hired to underwrite WeWork’s IPO, which only added a female director after its initial prospectus prompted criticism of its all-male board.“Starting on July 1st in the U.S. and Europe, we’re not going to take a company public unless there's at least one diverse board candidate, with a focus on women,” Solomon told CNBC Thursday. He didn't mention Asia, which continues to lag behind other regions when it comes to board diversity. Next year, the bank will raise the threshold to two diverse directors, which includes diversity based on sexual orientation and gender identity, Goldman said in a statement. The bank said the decision came after it learned more than 60 U.S. and European companies in the last two years went public without a woman or person of color on the board. Goldman Sachs has four women on its 11-member board.Among the IPOs where Goldman Sachs was an underwriter over the last two years in the U.S. and Europe, fewer than 10% currently have a board lacking a diverse candidate, the company said. Data was not available for the composition of those boards at the time of the IPO, the company said. “We realize that this is a small step, but it’s a step in a direction of saying, ‘You know what, we think this is right, we think it’s the right advice and we’re in a position also, because of our network, to help our clients if they need help placing women on boards,’” Solomon told CNBC. “So this is an example of us saying, ‘How can we do something that we think is right and help moves the market forward?’”JPMorgan Chase & Co. doesn’t have a similar policy to the new Goldman Sachs rule, but since 2016 has had a director advisory service that works to help companies find diverse candidates for their board, the company said in a statement. Morgan Stanley did not respond to requests for comment. For now, Goldman’s step is “pretty amazing,” said Boston University’s Foulkes, who was previously a director at Panera Bread Co. and Bright Horizons Family Solutions. “It's a seismic change.”(Clarifies second paragraph to show change refers to IPOs only. Adds quote in 7th paragraph. Adds reference to global diversity in 5th graf.)To contact the author of this story: Jeff Green in Southfield at jgreen16@bloomberg.netTo contact the editor responsible for this story: Rebecca Greenfield at rgreenfield@bloomberg.netFor more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.

  • Bloomberg

    Goldman's Anti-Bro Pledge Isn't Just a Stunt

    (Bloomberg Opinion) -- It’s easy to be cynical about the good intentions of a company caught up in one of the biggest frauds in history: the 1MDB scandal in Malaysia. Yet Goldman Sachs Group Inc.’s new stance on boardroom diversity shows how even the most profit-oriented of finance titans can — when pushed — further the virtues of stakeholder capitalism.Speaking at the World Economic Forum in Davos, where global leaders vowed to save humanity from climate change, Goldman’s chief executive officer, David Solomon, set forth a vision for his bank’s role in imposing better governance on its clients. From July it won’t manage the initial public offerings of American and European companies unless they have at least one non-white or non-straight male board candidate, Solomon said (the focus will be on women). In 2021, he’s going to “move toward… requesting two.”The move carries weight. Goldman is one of the top three IPO underwriters of the past decade, alongside Morgan Stanley and JPMorgan Chase & Co. It has an authority that wannabe public companies won’t be able to ignore.Going public is one of the critical junctures in a company’s history. It’s the moment when a century-old, family-owned widget maker, an upstart venture capital-backed tech unicorn, or a state-controlled behemoth, sets out on a course that will define its role in society for years to come. Getting the composition of its leaders right at the start sets the standard for what a company expects of itself just as it embarks on what’s often a period of rapid growth.Tech startups especially have been criticized for fostering a “bro’” culture that can be a hostile place for women, exemplified by Uber Technologies Inc. under the previous leadership of Travis Kalanick. But it’s not just about staff and society; shareholders will also benefit, according to Solomon. Companies with more diverse boards score better on measures of sustainability — an issue that’s increasingly important for asset managers. Broader representation has also been associated with higher profits and performance, although the empirical data is mixed.Goldman’s reputation could also use a little sprucing up, not only from the probes into its role raising money for the Malaysian investment fund 1MDB, but also around the subject of IPOs. It’s no coincidence that Solomon’s declaration follows two listing flops of epic proportions. Last year, his bank was one of the IPO underwriters for WeWork, which only added a female director after its first prospectus was pilloried. The deal was pulled eventually in part because of lingering governance concerns.International investors also spurned the biggest IPO of all time, Saudi Aramco, in part over concerns about controls and governance. Riyadh punished Goldman and its ilk by relegating them to the second-tier behind local banks, paying them considerably less after scrapping roadshows outside the Middle East.The two deals were embarrassments that Goldman will be keen to move on from by putting a more positive gloss on this part of the empire. What’s more, it’s unlikely to lose out on any big IPO business given the relatively modest ambition of its pledge. Of the listings managed by Goldman in the past two years in the U.S. and Europe, fewer than 10% had a board lacking a diverse candidate (many countries already enforce quotas). Half of the bank’s top-10 IPOs in 2018 and 2019 took place in Asia and the Middle East, regions not covered by Solomon’s promise. By flagging the more ambitious two-person target for 2021 now, Goldman is giving clients time to prepare. It’s also shrewdly reading where the “environmental, social and governance” trend is headed. Its first mover advantage may win it admirers among more enlightened startup companies and executives who have been weighing direct listings as alternatives to costly IPOs.It will take time for the “vampire squid” to shed its image as a pure opportunist, especially with 1MDB rumbling on. But whatever the motivation, pushing for greater diversity ups the collective pressure on other financiers to use their power for good. Over to you Morgan Stanley and JPMorgan.To contact the author of this story: Elisa Martinuzzi at emartinuzzi@bloomberg.netTo contact the editor responsible for this story: James Boxell at jboxell@bloomberg.netThis column does not necessarily reflect the opinion of Bloomberg LP and its owners.Elisa Martinuzzi is a Bloomberg Opinion columnist covering finance. She is a former managing editor for European finance at Bloomberg News.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.

  • Reuters

    MOVES-JPMorgan hires senior tech exec from Goldman Sachs -memo

    JPMorgan Chase & Co has hired senior banking technology executive Gavin Leo-Rhynie as head of engineering and architecture for the corporate and investment bank (CIB), according to a memo seen by Reuters. Leo-Rhynie, who will be based in New York, will join the bank on Monday after more than two decades at Goldman Sachs Group Inc where he held several senior technology roles, the memo said. At JPMorgan, Leo-Rhynie will serve as a member of the CIB technology leadership team and will focus on driving initiatives to modernize critical applications and infrastructure, according to the memo.

  • Lagarde Warns Markets Not to Assume ECB Policy on Autopilot
    Bloomberg

    Lagarde Warns Markets Not to Assume ECB Policy on Autopilot

    (Bloomberg) -- Sign up here to receive the Davos Diary, a special daily newsletter that will run from Jan. 20-24.European Central Bank President Christine Lagarde warned investors not to assume that current monetary policy is locked in for the foreseeable future just because officials are focused on reviewing their strategy.“To those who think it’s on autopilot, that’s ridiculous,” she said in a Bloomberg Television interview at the World Economic Forum in Davos, Switzerland. “Let’s look at the facts. Let’s look at how the economy evolves.”Lagarde spoke a day after announcing the first reappraisal of the ECB’s inflation goal and tools since 2003, in a process that won’t conclude until around December. With the euro-area economy stabilizing and a stimulus package already in place, few analysts see much chance of a change in policy any time soon.Economists predict the quantitative-easing program, which was resumed by former President Mario Draghi just before he handed over to Lagarde in November, will run until the end of next year, with interest rates on hold until early 2022. Markets aren’t pricing a change in rates until at least mid 2021.Still, the economic threats haven’t entirely subsided. Data published Friday showed private-sector activity remained muted at the beginning of 2020, despite signs of a pickup in Germany. In its policy meeting, the ECB continued to describe the risks to its outlook as tilted to the downside, if less pronounced. U.S. President Donald Trump used his appearance in Davos to revive the prospect of tariffs on Europe’s car industry.“The ECB is still far from bringing inflation to its target and we believe it will act in the next few months,” said Nick Kounis, an economist at ABN Amro in Amsterdam. “I don’t think a central bank like that can close the shop for a year.”Read more: Euro-Area Economic Growth Remains ‘Muted’ at Start of 2020Lagarde said the rethink will be separate from the monetary-policy decisions that the Governing Council takes every six weeks.Policy “will be conducted irrespective of the strategy review,” she said. “So to those who say it’s going to be completely static and stable for 12 months, I say ‘ah, watch out,’ because things change and we might have different signals and we might reconsider. We might. I don’t know at this point in time.”Scant DetailsDetails on precisely what policy makers will study in their review were scant on Thursday, beyond general observations that it will be wide-ranging and focus on topics such as financial stability and climate change. The key question for the ECB is why it has fallen short of its inflation goal of “below, but close to 2%” for years.Lagarde has her own views on what needs to be done but says she doesn’t want to disclose them for fear of influencing the debate before others have had their say. The intention is to reach out to academics and the wider public via national central banks.“I know some people are disappointed that we didn’t say much more,” Lagarde said. “But a strategy review starts here and finishes there, and you cannot say here what you’re going to do there -- otherwise you don’t do a strategy review.”Bank of France Governor Francois Villeroy de Galhau told Bloomberg Television in Davos that he believes the inflation goal must be “symmetric, flexible and credible” -- reflecting the debate over whether to set a precise 2% goal with a range of tolerance either side.His Dutch counterpart Klaas Knot said in a panel discussion alongside Villeroy that the ECB must be “honest and open” about its failure to hit its target, and “at a minimum, I would say that it needs to be clarified.”For some ECB watchers, officials have effectively hinted that there is little urgency to share their thinking, and that they’re in no hurry to getting back to tweaking their current monetary stance either.“I get the sense that until the review is complete, or at least until you have some idea of what’s going to come out of it, it doesn’t make sense to be very activist,” said Peter Dixon, an economist at Commerzbank AG.The ECB also has less ammunition than it used to, giving it cause for caution before attempting more easing. Resorting to more QE, for example, might mean confronting self-imposed limits on the volume of purchases that could reopen wounds from a bitter showdown among policy makers last year. The program is particularly disliked by the Bundesbank, and indeed faces a ruling on its legality in Germany’s top court in March.The central bank isn’t alone in benefiting from what is, for now, a relatively benign economic outlook. Economists including those at Goldman Sachs Group Inc. predict most major central banks, including the Federal Reserve, which meets next week, is likely to keep its monetary policy on hold for the rest of the year.Lagarde will discuss the global growth outlook at Davos later on Friday with a panel of luminaries including her Bank of Japan counterpart Haruhiko Kuroda, as well as U.S. Treasury Secretary Steven Mnuchin, and Kristalina Georgieva, her successor as head of the International Monetary Fund.(Updates with comment from Knot in 13th paragraph)\--With assistance from Carolynn Look and Jana Randow.To contact the reporters on this story: Paul Gordon in Frankfurt at pgordon6@bloomberg.net;Francine Lacqua in London at flacqua@bloomberg.netTo contact the editors responsible for this story: Alaa Shahine at asalha@bloomberg.net, Craig Stirling, Fergal O'BrienFor more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.

  • It’s Hard to Pull Off 3 Billion Trips During a Pandemic
    Bloomberg

    It’s Hard to Pull Off 3 Billion Trips During a Pandemic

    (Bloomberg Opinion) -- There’s never a good time for the outbreak of a deadly virus, but this one is particularly bad. China’s Lunar New Year is often dubbed the world’s largest migration, a stretch of weeks when hundreds of millions of people visit their families. Before the pandemic started spreading, officials were expecting 3 billion airplane and train trips during the holiday rush between Jan. 10 and Feb. 18. Millions more have gone abroad.Little wonder, then, that the travel industry is suffering. With the death toll up to 25 and more than 800 infected, tourists are staying home. Some have no choice: The government has put seven cities on lockdown and airports are stepping up screening measures. On Friday, China ordered all travel agencies to suspend sales of domestic and international tours.Shares of China Southern Airlines Co. – the carrier most exposed to the site of the outbreak – have slid 14% since the second death from the virus was confirmed, while Cathay Pacific Airways Ltd., which said it would waive fees for tickets to and from the mainland, has slumped 7.6%. The country’s largest online travel agency, Trip.com Group Ltd. has tumbled 12%.If the SARS outbreak of 2003 is any guide, things could get even worse. In May of that year, Chinese air passenger traffic fell 71%, according to Goldman Sachs Group Inc. Bernstein Research cited concerns of a repeat outcome when it cut Trip.com’s rating one notch to “market perform” earlier this week. The Nasdaq-listed company, which changed its name from Ctrip.com last year, issued a statement Thursday saying it would refund travelers who’ve been diagnosed, or those in close touch with them.The hope is that, like SARS, the turbulence will eventually pass. For Trip.com, however, the business challenges are bigger than the coronavirus. In recent years, the company has struggled to keep up with competition from digital rivals like Meituan Dianping and Alibaba Group Holding Ltd.Few travel companies have benefited more from China’s transition to the world’s biggest source of tourists in 2012. Despite the trade war and Hong Kong’s protests,(3) China’s outbound tourism numbers have continued to rise. According to Euromonitor International, 108.39 million overseas trips were taken last year, a 9.5% gain, after surging 11.7% in 2018. Trip.com now makes up a quarter of its total sales from outbound Chinese visitors, from under 15% five years ago, reckons Bloomberg Intelligence analyst Vey-Sern Ling.But the hotel-booking sector is getting crowded. Meituan Dianping has recently overtaken Trip.com as China’s top site, just five years after the food-delivery giant started dabbling in the business. Meituan now has 47% of China's market, ahead of Trip.com, with 34%, according to TrustData. Now, Meituan is moving further into Trip.com’s territory with luxury hotels, while chains like Marriott International Inc. are pushing for direct booking on their China websites. Alibaba said part of the $13 billion it raised from its Hong Kong listing in November would go toward fliggy.com, its online travel group site.If there’s any lesson to be gleaned from all this, it’s the benefit of diversification. While China’s superapp business model has arched some eyebrows (how can one company possibly provide digital payments, taxis, food delivery, massages and pet grooming?) there’s a decent case to be made for having some crisis-proof subsidiaries. Consider AirAsia Group Bhd, Southeast Asia's most successful budget airline, which is setting up a regional fast food franchise.Plans could already be underway for Trip.com to diversify its investor base, with the company discussing plans to go public in Hong Kong, Bloomberg News reported earlier this month. Here, Alibaba is a successful model. With its second listing, the company is now closer to its Chinese end-users, and Alibaba’s New York-listed stock has soared 14%.The four-month span of the SARS outbreak shows how quickly things can turn around: While China’s growth dipped in the second quarter of 2003, it swiftly resumed in the following months. Given how much more important the Chinese shopper is to the economy now, the damage could be more painful. A 10% fall in discretionary transportation and entertainment could shave 1.2 percentage points from China’s growth domestic product, according to “back of the envelope” estimates by S&P Global Inc. Hong Kong retailers and restaurants, just coming off the pain of last year's protests, were already suffering. For those companies that enjoyed the fast-rising Chinese consumer, it may be time to devise a plan B. (Updates to include China’s measures to suspend travel-agency sales.)(1) Hong Kong, followed by Macau, are the top two destinations of mainland Chinese travelers.To contact the author of this story: Nisha Gopalan at ngopalan3@bloomberg.netTo contact the editor responsible for this story: Rachel Rosenthal at rrosenthal21@bloomberg.netThis column does not necessarily reflect the opinion of Bloomberg LP and its owners.Nisha Gopalan is a Bloomberg Opinion columnist covering deals and banking. She previously worked for the Wall Street Journal and Dow Jones as an editor and a reporter.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.

  • Benzinga

    Goldman Sachs To Only Serve As IPO Underwriter For Companies With 'Diverse' Boards

    "Starting on July [1] in the [United States] and Europe, we're not going to take a company public unless there's at least one diverse board candidate, with a focus on women," the bank CEO, David M. Solomon, told CNBC at the World Economic Forum in Davos on Thursday. The bank will begin requesting two diverse board members from 2021 onward, the CEO added. According to Solomon, the IPOs of companies with at least one female board members have performed "significantly better" than those without, CNBC reported.

  • Financial Times

    Will big banks ever make money in China?

    Investment bankers should count their lucky stars. The Chinese government has long held a tight grip on the country’s financial system, opening up to trade but closing out competition to its national businesses from foreign institutions.

  • Q4 Results Show Improving Earnings Picture
    Zacks

    Q4 Results Show Improving Earnings Picture

    Q4 Results Show Improving Earnings Picture

  • Goldman Sachs to companies: Hire at least one woman director if you want to go public
    Reuters

    Goldman Sachs to companies: Hire at least one woman director if you want to go public

    From June 30, Goldman Sachs Group Inc will only help take a company public if it has at least one diverse board member, as such companies perform better after listing, Chief Executive David Solomon said on CNBC on Thursday. The policy will apply to U.S. and European companies and will increase over time, with the bank requiring two diverse board members starting in June 2021, Goldman Chief Executive David Solomon said on CNBC. "We're not going to take a company public unless there's one diverse board candidate with a focus on women," he said.

  • How Private Equity Wrecked New York's Favorite Grocery
    Bloomberg

    How Private Equity Wrecked New York's Favorite Grocery

    (Bloomberg Opinion) -- Have we finally reached the point where we automatically assume that every new retail disaster has been caused by a private equity firm? Yes, I believe we have. When the New York Post published a report on Tuesday contending that New York’s Fairway Market grocery chain was going to liquidate — a claim denied by the company, which subsequently filed for Chapter 11 bankruptcy protection on Thursday — I began exploring whether private equity was indeed responsible for its problems.It was.The year was 2007. Fairway, a treasured New York institution that was founded in 1933, had grown from one store on Manhattan’s Upper West Side to four stores, three in New York City and one on Long Island. The stores were supermarket size, but they didn’t much resemble a Safeway or a Kroger. They were eclectic, with 50 brands of olive oil, dozens of varieties of olives, cheese, smoked salmon, imported beer and who knows what else. It was quintessential New York. On a per-square-foot basis, the four Fairways were among the highest grossing grocery stores in the country.Howie Glickberg, the grandson of the founder, was one of three partners who owned Fairway Market. The other two were ready to cash out, and others in management who held small equity stakes were looking for a payday. Glickberg needed to find a source of liquidity. Unfortunately for him, he found Sterling Investment Partners, a private equity firm based in Westport, Connecticut, that focuses on mid-market companies.“I was looking to expand the business,” Glickberg told me when I caught up with him on Wednesday afternoon. In the ensuing buyout, Sterling put $150 million into the company in return for an 80% ownership stake. The majority of that was debt. Needless to say, the debt landed on Fairway’s books, not Sterling’s. Three Sterling partners, including co-founder Charles Santoro, joined the board. None of them had any grocery experience.Sterling had enormous ambitions for the company. Glickberg had envisioned expanding slowly, a store at a time. Santoro talked about turning Fairway into a national chain with hundreds of stores that would compete with Whole Foods and Trader Joe’s. Santoro did not respond to an email request for an interview.By 2012, Fairway was up to 12 stores, including some in suburban New Jersey, where the company’s urban cachet didn’t necessarily translate. Most of this expansion was fueled by yet more debt. Not surprisingly, the expansion eviscerated the company’s profits while adding millions more in debt to its balance sheet. By 2012, its debt burden had grown to more than $200 million, and it was losing more than $10 million a year.Badly in need of cash, Sterling turned to the public markets. In April 2013, Fairway Group Holdings Corp., as the company was now called, went public at $13 a share, raising $177 million. Its prospectus said that the money would go toward “new store growth and other general corporate purposes.” But that wasn’t quite accurate; the prospectus showed that more than $80 million went to pay “dividends” to preferred shareholders — i.e. Sterling Investment Partners. An additional $7.3 million went to management.Around the same time as the IPO, Glickberg was pushed aside and a new chief executive officer was brought in, an accountant who had been an executive at Grand Union, a grocery chain that failed in 2013. Glickberg did stay on the board, however, where he was the only person with either grocery or retail experience.By 2014, Fairway was up to 15 stores. Its directors — a number of them Sterling executives — were paying themselves absurd amounts of money: $12.1 million in 2013, according to the company’s 2014 proxy. Santoro alone took down $5.4 million that year — at a company with a market cap below $170 million.And that wasn’t the only problem with how Fairway was being run. Hannah Howard, Fairway’s former director of communications, would later describe what it looked like from the inside:[T]he place was kind of a mess: It took months to get paid, with leadership claiming paychecks had been lost on the truck to Red Hook. As expansion scaled, finding talented, knowledgeable staff became more difficult, so quality at new locations began to suffer. It became increasingly apparent that Fairway’s corporate leaders were good at running two or three stores, but they didn’t make the right preparations to run a dozen. “There were not processes or systems in place that were scalable,” says one erstwhile executive. “The leadership was completely incompetent.”Meanwhile, Whole Foods and Trader Joe’s were expanding methodically. When Amazon Inc. bought Whole Foods, it meant that Fairway had a competitor with limitless cash. Fairway’s vaunted revenue-per-square-foot numbers dropped by a third. Cash flow was consistently negative. The stores looking increasingly shabby because the company couldn’t afford to keep them up. By 2016, saddled with $267 million in debt, Fairway filed for Chapter 11 bankruptcy protection. It hadn’t turned a quarterly profit the entire time it was a public company.Here perhaps is the strangest part of the story: Although Fairway managed to reduce its debt by $140 million through the bankruptcy process, it didn’t use bankruptcy to close stores or break any of its expensive leases ($6 million alone for the flagship store on the Upper West Side). It didn’t try to go back to what it was, a small chain of groceries that were part of New York’s central nervous system. Meanwhile, Sterling Investment Partners, having milked Fairway for nine years, walked away. Another private equity firm, the Blackstone Group Inc., took over. Glickberg retired.By August 2018, Blackstone had exited and the company had been bought by two other private equity firms: Brigade Capital Management LP and Goldman Sachs Group Inc. In November, they hired a new CEO, a turnaround specialist named Abel Porter, who actually did have grocery experience. He was the company’s fourth CEO in six years.“We’re not burning cash, we’re accumulating cash,” Porter told Bloomberg News at the time. He added that there was “no risk of running out of capital” despite a debt level that exceeded $300 million. In that same article, however, a credit analyst for Moody’s Investment Service, Mickey Chadha, predicted that Fairway would need to be restructured again within 18 months. More money was going out the door than was coming in.Chadha’s prediction was off, but not by much. It’s been 14 months since that article ran, and Fairway is once again in deep trouble. When I asked him how he saw it coming, he laughed. “That’s my job,” he said. “You could see it when you looked at their liquidity. They just weren’t generating enough cash. No free cash flow, and lots of debt. It was highly predictable.”A few months ago, Chadha updated his analysis of Fairway’s bonds. He said that, as of June, the company’s remaining cash was down to $10 million and he predicted that it would continue to dwindle through 2020. “The company,” he concluded, “has limited alternative sources of liquidity as virtually all tangible and intangible assets are pledged to the credit facilities.”As part of its bankruptcy plan, Fairway agreed to sell five stores and a distribution facility to Village Supermarket Inc. for $70 million. Village Supermarket is another grocery chain owned by a family, the Sumas family of New Jersey. It seems to have done what Sterling Investment Partners could not: expand sensibly. The company now has 30 stores. If a handful of Fairway stores end up being run by the Sumas family, it will have saved an institution that private equity nearly destroyed.“I’m upset about what happened,” Glickberg told me. “They made a lot of bad decisions. They brought in people who knew nothing about the business and nothing about New York. My grandfather started the company, so it was more than a business to me.”I guess one moral of this story is that if you run a family company, don’t sell it to a private equity firm unless you don’t care what happens afterward. But mainly, it reaffirms what we are all coming to realize: private equity firms like Sterling Investment Partners aren’t on the side of the companies they buy. Not really. They’re out for themselves.To contact the author of this story: Joe Nocera at jnocera3@bloomberg.netTo contact the editor responsible for this story: Daniel Niemi at dniemi1@bloomberg.netThis column does not necessarily reflect the opinion of Bloomberg LP and its owners.Joe Nocera is a Bloomberg Opinion columnist covering business. He has written business columns for Esquire, GQ and the New York Times, and is the former editorial director of Fortune. His latest project is the Bloomberg-Wondery podcast "The Shrink Next Door."For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.

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