Goldman Sachs, the Wall Street giant, has never struggled so hard to convey bad news to the outside world.
In order to avoid disappointing investors on the day of its earnings release for the third consecutive quarter, Goldman Sachs has adopted a new approach. Its executives have broken with convention and proactively lowered expectations for next week's earnings disclosure.
As a result, since mid-June, analysts have nearly halved their earnings expectations for Goldman Sachs, marking the largest downward revision during CEO David Solomon's tenure. This will place Goldman Sachs at the forefront of profit decline among its peers, with a potential return on equity of below 5%, far below the company's target of around 15%.
Mike Mayo, an analyst at Wells Fargo, commented in an interview:
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&#34;This could be the worst quarter for David Solomon since becoming CEO. There may be five or six projects this quarter that have fallen into a weak, poor, or ugly state.&#34;
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Over the past six weeks, Goldman Sachs has hinted at a 25% decline in its trading revenue, emphasizing substantial write-downs in its real estate investments, and announcing significant write-downs due to the sale of the Greensky loan platform. Mayo stated that although not explicitly stated, this is essentially a pre-release of the earnings.
Releasing a lot of information in advance may alleviate the pressure on the stock price when the earnings are actually released on July 19. On the day of the bank's January earnings release, the stock price fell by 6%, and in April, it lagged behind its peers again. For Goldman Sachs, which is trying to prove that strategic mistakes are a thing of the past, this is inevitably embarrassing.
Barclays analyst Jason Goldberg stated, &#34;This is the first time in quite a while that they have provided specific guidance during the earnings gap.&#34; He also said, &#34;While many banks do this, Goldman Sachs generally does not.&#34;
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&#34;Preparing the market for potential issues can indeed reduce the volatility of the stock price on the day of the earnings release.&#34;
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Analysts expect Goldman Sachs' net profit for the second quarter to be $1.5 billion, a 48% decrease compared to the same period last year. They predict that Morgan Stanley's net profit will decline by 19%, while Bank of America and JPMorgan Chase will see an increase. The average earnings per share expectation for Goldman Sachs is only $4.23, and some recent expectations are even below $3.

Since mid-June, analysts have almost halved Goldman Sachs' quarterly profit expectations, marking the largest downward revision during David Solomon's tenure as CEO of Goldman Sachs.

Goldman Sachs "crazy hint": Second-quarter performance will be difficult to look at, fearing to lag behind peers.