So now we know why Goldman Sachs moved up its earning’s announcement to last night: it wanted to rush its stock offering into the market overnight. It will likely announce that the deal has priced before the market opens this morning. The price will reportedly be around $123 per share.
Goldman has a reputation of being the most agile bank around. It is proving that it deserves that reputation big time today.
One thing Goldman avoided by rushing the earnings and the offering into the market: any uncertainty about bank earnings that might be created by Citi’s announcement on Thursday. Right now the market is in jubiliation mode, believing that Goldman’s awesome quarter may presage a relief from the troubles of financial firms. That could be dashed if Citi’s earnings are dismal or even mildly disapointed.
While it’s true that Goldman would be able to claim that it was outperforming competitors, it might not be able to escape the fact that financial stocks have been strongly correlated recently. As much as it wants to break out of the pack, some investors might be sceptical that Goldman can continue to repeat its outperformance.
So much of Goldman’s amazing results come from its basically opaque trading business that investors can easily become spooked. There’s no ‘same store sales numbers’ or anything else by which to guage how Goldman is doing. Investors are just asked to trust that Goldman’s traders are better, faster, smarter than everyone else. Time and again, that trust has paid off. But one casualty of the financial meltdown has been trust in Wall Street. Goldman, it seems, didn’t want to risk the rise of distrust once again.