Boo Hoo Goldman Sachs…It’s Not Easy Being a Low Margin Vampire Squid

Goldman Sachs CEO David Solomon told employees at a meeting attended by CNBC this week that “we’re getting absolutely no credit from anybody else in the investing community” on the firm’s digital banking efforts.

Boo Hoo David.

I do admit that a few years ago I thought Goldman Sachs might be able to break out of their banking era base above $250/share on trying to go all Google, investing in the future of finance. They have made some shrewd investments in the likes of Plaid and their own non bank bank savings app Marcus.

But, today at $69 billion that does not look to be happening. Here is the chart:

The question is why?

It seems that Wall Street prefers the good old days of Goldman being focused on the high margin business of pillaging nations and clients.

Here is the new ‘Vampire Squid Light’ Goldman today:

In its latest incarnation, Goldman appears to have figured out that rather than being pure altruism, the new fintech ethos of zero fees and pricing transparency is actually an advanced form of self-interest.

“Our promise is that in everything we do, we help customers save money,” Talwar said in a recent interview. “We are not doing it as a not-for-profit motive or something. We are doing it because we think it helps us win.”

I’m sure Goldman’s Harit Talwar ( quote above who runs the consumer finance division) will enjoy his post in Russia after that quote.

I doubt Goldman thought that after raising Netflix to a strong buy in 2019 that Netflix’s Patriot Act’s Hasan – loved by millennials – would not have devoted a full episode to Goldman Sachs bashing for it’s role in ripping off Malasysia.

Goldman is also now all in on another low margin business, paying top dollar for RIA’s that face a deflationary spiral.

Goldman Sachs seems all in on their move to go hipster banking and wealth management and until the stock can reclaim it’s all time highs of $250, let’s just say that nobody is buying the story…and that story is that a low margin business at any scale is not the old Goldman that people feared …or Vanguard.