Goldman Sachs Set for Hundreds of Layoffs Next Week
Goldman Sachs employees are preparing for layoffs.
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David Solomon, the CEO of Goldman Sachs, famously moonlights as a DJ, but soon he’ll be dropping pink slips, not beats.
The legendary Wall Street bank will lay off several hundred employees this month, according to sources who spoke to The New York Times, to buttress against a slowdown in deals and an uncertain economy.
Return of the Gauntlet
There’s been blood all over the dance floor. The Federal Reserve’s all-out blitz to tame inflation with increasingly higher rates threw ice water on what was a flaming hot market for deals. The macro data, meanwhile, is sending mixed signals: in the second quarter, US gross domestic income rose 0.3% adjusted for inflation, according to the Commerce Department but GDP, adjusted for inflation, fell 0.1%. Some economists think the country is already in a technical recession; others expect it will narrowly avoid one.
For Goldman, it seemed like a good time to revisit what before the pandemic was an annual tradition: layoffs. Every year the bank axed between 1 and 5% of its staff, focusing on underperformers. Today Goldman has 47,000 employees, and the cuts are expected to come in at the low end of that spectrum this time, according to the NYT. But the cut-throat mentality of yore is back, and it’s hard to argue with the logic:
- According to Bloomberg data, Wall Street analysts expect the bank’s earnings will fall more than 40% this year. Goldman’s shares have tumbled more than 10% in 2022 — its 15% drop in the last 12 months is double the 7.5% fall of the S&P 500 Financials index.
- The key culprit is investment banking, which has suffered a considerable slowdown. Goldman’s trading unit revenue surged 32% in the second quarter while investment banking revenue fell 41% — an IPO desert, falling stock indexes, and a global economy in quicksand hasn’t exactly helped.
Take Us Back: Life could be worse. Over 75,000 job cuts have been announced in the technology industry this year, according to Layoffs.fyi. Some of those turfed from tech are seeking safe haven on Wall Street — both Intercontinental Exchange, owner of the New York Stock Exchange, and Cboe Global Markets, owner of the Chicago Board Options Exchange, have increased their tech units by a quarter this year. As they say in fintech, if you can’t beat ‘em, join their API team.