Gold­man profit slammed by sour­ing WeWork, Uber bets

The Korea Times - - WORLD BUSINESS -

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)

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