Since its initial public offering in 1999, Goldman Sachs has reported a quarterly loss twice. The first time was in 2008 in the midst of the financial crisis. The second time was last week.
Net revenue fell 60% in the third quarter. Revenue from fixed income, commodities and currencies fell 36% (this is typically the firm’s biggest revenue source). The loss for the quarter amounted to $393 million. With that loss, the company’s near-term outlook is “cautious”. And another concern: Goldman has “gross credit exposure” to the five most troubled euro zone countries, to the tune of $4.2 billion.
Company executives blame market conditions for the loss. “Our results were significantly impacted by the environment and we were disappointed to record a loss in the quarter”, according to CEO Lloyd Blankfein. Market condition-driven loss or not, financials are a sell. The sector has lagged behind others with a loss of 17.6% so far this year… and the sector has been a long-term sell since June. Goldman Sachs is down 39% year-to-date, and the stock signaled a sell back in May.