Goldman Sachs (NYSE:GS) plans to sell its General Motors (NYSE:GM) credit card business, as reported by The Wall Street Journal. This marks the company’s latest efforts to divest the remaining portions of its unprofitable consumer lending business.
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Regarding the sale, the company has informed its Platform Solutions division employees, responsible for the GM card program, about its intention to sell the card portfolio.
Troubled Consumer Lending Unit
Goldman’s entry into consumer banking had a considerable impact on its profitability and attracted criticism from within the company. To reduce its exposure to the business, GS disclosed the sale of GreenSky, a platform providing loans for home renovation projects, last month. The platform was sold at a loss just a year after Goldman bought it for $1.73 billion.
As part of the consumer banking winding process, the company also divested the majority of its personal loan portfolio earlier in April.
Background
Goldman launched the “My GM Rewards” card in early 2022. The program allows cardmembers to redeem points for the purchase of a new Chevrolet, Buick, GMC, or Cadillac vehicle or in-dealership GM services. It is worth mentioning that the GM card is the second credit card Goldman has offered through its Marcus consumer bank app. Notably, GS introduced a similar credit card with Apple Inc. (AAPL) in 2019.
It is worth mentioning that Goldman appointed Bill Johnson, with experience in the credit card business, from Citigroup (C). Johnson has been assigned the task of enhancing the credit card partnerships’ performance.
By selling the GM card portfolio, Goldman aims to control expenses associated with its card program. Reportedly, GS held talks with American Express (AXP) for the sale of both Apple and General Motors cards.
Is GS a Good Stock to Buy Now?
Goldman’s stronghold in the investment banking industry is a key positive factor. Further, its efforts to move away from the consumer banking business are expected to aid improvement in financial performance. Additionally, CEO David Solomon expects IPO markets to recover in 2024, thereby benefiting the company’s topline growth.
Overall, Wall Street analysts are optimistic about GS stock. It has received 12 Buy and four Hold recommendations for a Strong Buy consensus rating. Meanwhile, the average Goldman stock price target of $392.73 implies 21.23% upside potential from current levels.
