It’s easy to wonder if, perhaps, Goldman Sachs (GS) is trying to solve the wrong problem. Just look at its latest move, buying a set of logistics properties in Australia to augment its real estate holdings. Investors seemed all right with it, though, as shares of the banking giant were up over 1.5% in Tuesday afternoon’s trading.
It was part of Goldman’s “alternative investments platform,” which should make it clear that the move wasn’t really supposed to be mainstream. Goldman purchased a set of “logistics-focused properties” around several major Australian cities with “last-mile solutions.” This includes warehouses and fulfillment centers, among others, designed to consolidate deliverable products for final delivery to one particular geographic area.
This could give Goldman a leg up in e-commerce operations—those kinds of properties are vital for online retailers—but given the current state of the consumer worldwide, it may not work quite as well as they hope.
The Consumer Is Tapped Out
There are signs suggesting that betting on an e-commerce surge might be a bad play. Goldman, along with Bank of America (BAC) and Citigroup (C), reported a combined total of $4.139 billion in bad loan losses for the second quarter of this year alone. Goldman may have gotten off the lightest, with net charge-offs only coming in at $359 million, but it still took a pretty substantial hit. The consumer is beginning to tap out, and there are signs that bad debts are on the rise throughout the system, which could kick off much bigger problems later, like making those last-mile logistics properties a lot less useful.
Is Goldman Sachs a Buy, Sell, or Hold?
Turning to Wall Street, analysts have a Strong Buy consensus rating on GS stock based on 13 Buys and four Holds assigned in the past three months, as indicated by the graphic below. After a 42.05% rally in its share price over the past year, the average GS price target of $515.19 per share implies 4.48% upside potential.
