Goldman Sachs (GS)

Goldman Sachs is listed on the New York Stock Exchange as GS. It's the world’s second-largest investment bank in the world, preceded only by JP Morgan Chase & Co.

 

According to the Financial Stability Board, Goldman Sachs is a Systemically Important Financial Institution (SIFI) making it an integral part of the US economy. In layman's terms, they are 'too big to fail'. Should it come to the verge of collapse, the US Treasury would bail it out, like it did during the 2007-2008 global financial crisis. Goldman Sachs received a USD 10 billion investment from the US Treasury, which it repaid already.

 

Start-up businesses go to Goldman Sachs for investment, financing, and IPO launches. Some notable brands include Twitter, Bumble, Robinhood Markets, Spotify, Foodpanda, and Dropbox.

 

Despite being a SIFI, Goldman Sachs' stock price is still susceptible to major price fluctuations. If GS is showing extreme volatility, here are some possible reasons why:

 

• Goldman Sachs has close relations with the US economy. When the economy is booming, GS moves up and when the US enters a recession, GS falls.


• The success of the brands Goldman Sachs supports has an impact on its quarterly earnings reports, which reflect in its stock price. Inversely, when the IPOs and start-ups that it backed fail, GS tends to get a hit.


• Goldman Sachs relies heavily on public trust and brand image. Controversies, such as its support of Nazi Germany during World War II, allegations of market manipulation and abusive treatment of its workforce, drive the stock price down.


• Reports of massive layoffs influence investor sentiment as they indicate that the company has pressure in its financials. Alarmed investors tend to sell their shares, resulting in a further price drop.