Goldman Sachs Group is making a remarkable comeback, signifying a potential end to any uncertainties surrounding the leadership of Chief Executive David Solomon.
After a sluggish year and a half, capital-market activity is finally picking up pace, offering the bank an opportunity to capitalize on its traditional investment-banking business. This shift in focus away from costly errors in consumer banking has been a game-changer for Goldman (ticker: GS). Notably, this month the bank has taken a lead underwriting position in three major initial public offerings: Arm (ARM), Instacart (CART), and Klaviyo. It’s a natural spot for a financial powerhouse like Goldman to excel.
This recent success serves to counterbalance the negative press the bank has endured due to a $4 billion loss in its consumer business over the past three and a half years. Many on Wall Street were puzzled by Goldman’s attempt to appeal to the mass market, as the renowned institution with its prestigious reputation and relationships seemed an odd fit. The costly mistake inevitably raised doubts about Solomon’s leadership.
Solomon, as CEO, inevitably becomes an easy target. Beyond his demanding role, he is also known for his passion as a DJ, having performed at Lollapalooza and other music festivals. When Goldman performs well, Solomon’s hobby may seem quirky, but when the bank faces challenges, it can become a liability.
Additionally, the bank has seen a loss of 200 partners in the last five years. While this attrition rate is in line with previous periods, some recent departures seem to stem more from discontent than from seeking new opportunities elsewhere.
The bank, understandably, declined to comment on these matters.
While it may be premature to believe that all of Goldman’s challenges have been left behind, there are indications that the institution is at an inflection point. Moreover, Solomon appears to enjoy the support of Goldman’s board, as stated in a note from Mike Mayo, an analyst at Wells Fargo Securities.