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Home / Trading Goldman Sachs After Q2 Earnings Report

Trading Goldman Sachs After Q2 Earnings Report

Usually, bank stocks do well when interest rates rise. However, that didn't happen this year as most bank shares traded lower.

Of the banks that have reported earnings so far this year, most have missed analyst expectations as banks set aside capital to meet loan loss expectations in the event of a recession.

Goldman Sachs has bucked the earnings trend by hitting revenue and sales. Learn how to trade stocks below.
  • Share: Goldman Sachs Group Inc
  • Invest.MT5 Account Icon: GS
  • Idea date: 19 July 2022
  • Timeline: 1 – 6 months
  • entry rate: $314.00
  • target rate: $373.00
  • Position size for Invest.MT5 accounts: Maximum 5%
  • Staking: High
The Invest. MT5 account allows you to buy real stocks and shares from 15 of the world's largest exchanges.

Every trade involves high risk and you can lose more than your risk in the trade. Never invest more than you can afford to lose because some trades will lose and some trades will win. Start small to understand your own risk tolerance, or practice on a demo account. Build your knowledge first before investing.

Why trade? Goldman Sachs stock?

In Goldman Sachs' latest earnings report, released July 18, the bank reported profits and earnings that beat analyst estimates. Earnings per share were $7.73 versus $6.58 expected, while earnings were $11.86 billion versus $10.86 billion expected.

While second-quarter profit declined in the investment banking division – a slowdown seen across the industry – the bank's fixed income business generated $3.61 billion in revenue on “much higher” trading activity in currencies, commodities and interest rates.

The trends found in the Goldman report have also been highlighted in other bank earnings reports. For example, many mergers and IPOs have been canceled due to the current economic environment, causing the dealmaking department to slow down.

However, Goldman is considered a well-diversified bank, so losses in one business have been offset by gains in other businesses.

Data from the 13F report of 203 hedge funds filed with the Securities & Exchange Commission (SEC) showed that hedge funds added 931.8K shares to their positions in the last quarter.

While there are some positives to take from the earnings report, most banks have had a hard time this year. Goldman shares are down more than 23% for the year. If the US can avoid a recession, higher interest rates could help improve margins in the coming quarters.

However, many analysts warn that if interest rates continue to rise but economic growth fails to pick up, the chances of a recession are high. In fact, banks such as JP Morgan and Wells Fargo have both announced that they will set aside more funds to anticipate consumer and corporate credit losses.

Goldman Sachs stock forecast – What do dotdia analysts say?

There are currently 9 buy, 4 hold, and 0 sell recommendations for the stock, according to analysts surveyed by TipRanks for Goldman Sachs stock forecasts over the past 3 months. The highest price level for the Goldman Sachs stock forecast is $425.00 and the lowest price target is $325.00.

The average price target for the Goldman Sachs stock forecast is $373.91, up more than 20% from current levels at the time of writing.

Exemplary trading idea for that Goldman Sachs Stock price

An example of a trading idea for a Goldman Sachs stock price might look like this:
  • Buy the stock on a break above $314.00 to account for current market volatility.
  • Target just below the analyst's average price target of $373.00.
  • Keep your risk low with a maximum of 5% of your total account.
  • Timeline = 1-6 months
  • If you buy 10 shares of Goldman Sachs:
  • If target is met = $590.00 potential profit ($373.00 – $314.00 * 10 shares).
It is wise to keep in mind that stock prices are unlikely to rise in a linear fashion and could actually drop further before bouncing higher, especially given the recent sell-off in global stock markets.

Therefore, pay attention to good risk management, which is one of the most important aspects of successful trading. You should always be aware of how big your potential loss is in trading and the risks involved.

Another factor to consider is commission, which can affect your profits. The Admirals Invest.MT5 account allows you to buy US stocks starting at $0.02 per share. This means that buying 10 shares of Goldman Sachs will result in a commission of $0.20.