Goldman Sachs (GS) - Top Deal-Maker On Wall Street
May 31, 2023
Explore the fascinating journey of Goldman Sachs, from its roots in commercial paper trading to its current status in investment banking. Delve into the firm's innovative business model, which spans global banking, asset management, and platform solutions. Uncover the intricacies of its revenue streams, particularly focusing on investment management growth and the need for improvement in investment banking. Get insights into their financials, including expenses and profit structures, and find out how the stock stands in today's market.
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Origins of Goldman Sachs
Goldman Sachs originated in 1869 with Marcus Goldman trading commercial paper in Manhattan.
The firm expanded into investment banking and helped Sears Roebuck go public in 1906, pioneering valuation by earnings power.
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Valuation Innovation
Goldman Sachs innovated by valuing companies for their earnings power, not just assets.
This led to the creation of the price-to-earnings ratio as a key valuation metric.
insights INSIGHT
Pioneering Wall Street Fields
The firm pioneered block trading and early mergers and acquisitions departments.
Goldman Sachs expanded internationally and added asset management, growing beyond traditional investment banking.
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In this episode of the Stock Stories podcast, we will be discussing the history, business model, and financials of Goldman Sachs. We will provide a brief history of the company, highlighting its innovation in trading capabilities and investment banking services. Today, Goldman Sachs has three main divisions: global banking and markets, assets and wealth management, and platform solutions. It is worth noting that Goldman Sachs derives most of its revenue from investment activities, with the investment management division showing steady growth. We will also take a look at the balance sheet and cash flow statement of Goldman Sachs, concluding that the stock is not undervalued or overvalued.
00:46 - Goldman Sachs History The history of Goldman Sachs, from its origins in commercial paper trading to its expansion into investment banking and asset management.
05:20 - Goldman Sachs Business Model An overview of Goldman Sachs' business model, including its three main divisions: global banking and markets, assets and wealth management, and platform solutions.
08:21 - Goldman Sachs Financials A breakdown of Goldman Sachs' revenue streams, including investment banking, investment management, commissions and fees, and market making.
10:08 - Goldman Sachs' Revenue Goldman Sachs' revenue in investment management has steadily grown, while their investment banking division needs improvement.
11:04 - Goldman Sachs' Expenses and Profits Goldman Sachs' expenses are mostly compensation and benefits, with a profit of 107 billion in 2022, a far cry from the 21 billion in 2021.
13:48 - Goldman Sachs' Cash Flow and Stock Performance Goldman Sachs has a good cash position relative to their loans, invests in acquisitions and technology, pays dividends, and has a stock price history of 38% growth in the past five years.
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