In its most recent wave of job layoffs, global investment banking giant Goldman Sachs (NYSE:GS) plans to eliminate less than 250 positions, according to reports. These jobs will mostly affect senior-level staff, including managing director roles. This is Goldman’s third round of layoffs within a year, with the first one in September 2022, and the biggest one so far in January 2023, which eliminated 3,200 jobs. Year-to-date, GS stock is down 3.8%.
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The downsizing initiatives are intended to avoid the recent fall in deal-making volume. Due to the gloomy M&A climate, Goldman’s investment banking income fell 26% year-over-year in Q1FY23. Moreover, trading revenues took a hit from the highly volatile equity markets this year. To add to that, the ongoing tough interest rate scenario coupled with the recent banking crisis has led to a further slump in deal-making activities.
To address these problems, GS has identified cost-cutting measures through which it can save up to $1 billion in expenses this year, including job cuts. The bank may even undertake another round of performance-based job cuts in September 2023, which is its annual practice.
Goldman is not the only investment banker to lay off employees; rival Morgan Stanley (NYSE:MS) also announced that it will slash another 3,000 jobs this month as subdued dealmaking continued to weigh on its performance. Also, financial advisory and asset management firm Lazard Ltd. (NYSE:LAZ) announced a 10% workforce reduction in April this year.
Is GS a Good Stock to Buy?
Despite the macro challenges, analysts remain highly bullish on GS stock. On TipRanks, GS commands a Strong Buy consensus rating based on 13 Buys and two Hold ratings. Further, the average Goldman Sachs price forecast of $407.67 implies 23.2% upside potential from current levels.
