Goldman profit falls short on weak M&A advisory

Goldman Sachs Group Inc missed Wall Street estimates for quarterly profit on Tuesday as global economic worries dampened appetite for deals, while it faced up to losses on its own high-profile investments in Uber Technologies and WeWork.

The bank’s shares slipped nearly 2% as revenue at three of its four major businesses fell, led by a 15% drop in investment banking revenue because of lower advisory and underwriting fees.

At the bank’s investing and lending division, which will have to wear the collapse in the value of WeWork owner The We Company as well as in other major market launches this year, net revenue fell 40% from last year to $662 million.

Analysts had estimated that Goldman would book a loss of over $250 million from its stake in WeWork in the third quarter. Goldman executives on Tuesday declined to comment on its stake in the office-sharing startup.

Before its botched public debut, WeWork’s valuation plummeted from a peak of $47 billion in January to as low as $10-12 billion, Reuters reported last month. Uber’s shares are down 24% since the company debuted earlier this year.

The only bright spot for Goldman was its institutional client services business, which accounts for nearly a third of its overall revenue, but a 6% growth at the unit was not enough to offset weakness in its other major businesses.

“Overall, GS posted mixed results this quarter. While the top line beat to us was a positive, it was driven by more trading which tends to be less persistent and investment banking results were weak,” analysts at Keefe, Bruyette & Woods said in a note to clients on Tuesday. (RTRS)