Goldman Sachs Announces $30 Billion Share Repurchase – Buyback Wednesdays

Goldman Sachs (GS), the second largest investment bank in the world by revenue, announced a whopping $30 billion share repurchase program which represents nearly a quarter of its market cap.

Buyback activity edged up further with 28 companies announcing buybacks last week compared to 20 companies in the prior week. The Chinese internet search platform, Baidu, Inc. (BIDU) also announced a huge $5 billion share buyback, effective through December 2025, representing around 10.6% of its market cap at announcement. Unfortunately, Baidu did not make our top 5 list this week.

Share Repurchases:

Goldman Sachs has been using share repurchases as a way to return capital to its shareholders. During 2022, it returned a total of $6.7 billion to shareholders, including common stock repurchases of $3.50 billion and common stock dividends of $3.2 billion. In Q4 2022 alone, it bought back $1.5 billion of its common stock. Since 2018, the company has retired around 8% of its outstanding shares. These figures indicate that the buybacks announced are not just to offset dilution caused due to stock-based compensation. Instead, the announcements are backed by some solid share repurchases.

Q4 & FY 2022 Results:

The fourth quarter was disappointing and challenging for Goldman Sachs. The company generated revenues of $10.6 billion and net income of $1.3 billion and EPS of $3.32. These results missed EPS consensus estimate of $5.56 by 39%. It’s the biggest EPS miss in more than a decade for Goldman. The company finished 2022 with revenue of $47 billion and EPS of $30.06, down from $59 billion in revenue and $59.45 EPS in 2021. This decline in revenue was driven by a 50.5% decrease in investment banking revenue y/y, an 83% decrease in equity underwriting, and a 12% decrease in financial advisory. Total operating expenses for the year were $31.2 billion, down 2% from the previous year. Compensation expenses also fell by 15%. For 2023, the consensus estimates expect a decent improvement in all segments but considering the highly uncertain macro environment, these estimates might prove to be optimistic.

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