Goldman profit slammed by souring WeWork, Uber bets
Goldman Sachs Group missed Wall Street estimates for quarterly profit on Tuesday as it took heavy losses from high-profile investments in WeWork and Uber Technologies and faced up to a weakening global economy.
The bank’s shares slipped nearly 3 percent as revenue at three of its four major businesses fell, including a 15 percent drop in investment banking revenue because of lower advisory and underwriting fees.
Net revenue at Goldman’s investing and lending division slumped 40 percent as it swallowed a loss of about $80 million on its stake in WeWork owner The We Company, along with hits from other investments.
Chief Operating Officer Stephen Scherr blamed the bank’s investments in ride-hailing company Uber, medical device maker Avantor and trading platform Tradeweb for the $267 million markdown in the quarter.
Scherr said those investments comprise 40 percent of the bank’s $2.3 billion invested in public companies, and they “were the largest contributors to the downdraft.”
Office-sharing startup WeWork’s valuation plummeted from a peak of $47 billion in January to as low as $10-12 billion, Reuters reported last month, forcing it to pull its IPO. Uber’s shares are down 24 percent since the company debuted earlier this year.
An analyst note out earlier this month from Morgan Stanley projected that Goldman could lose as much as $264 million on its investment in The We Company. (Reuters)