Trading Goldman Sachs After Q2 Earnings Report

July 18, 2022 21:17

In usual times, banking stocks tend to perform well when interest rates are rising. However, that has not been the case this year with most bank stocks trading lower.  

Of the banks that have reported earnings so far this year, most have missed analyst expectations due to banks setting capital aside to deal with expected loan losses if a recession develops.  

Goldman Sachs has bucked the earnings trend with a beat on earnings and revenues. Learn how to trade the stock below.  

Stock: Goldman Sachs Group Inc
Symbol for Invest.MT5 Account: GS
Date of Idea: 19 July 2022
Time Line: 1 - 6 months
Entry Level: $314.00
Target Level: $373.00
Position Size for Invest.MT5 Account: Max 5%
Risk: High
  • The Invest.MT5 account allows you to buy real stocks and shares from 15 of the largest stock exchanges in the world.

All trading is high risk and you can lose more than you risk on a trade. Never invest more than you can afford to lose as some trades will lose and some trades will win. Start small to understand your own risk tolerance levels or practice on a demo account first to build your knowledge before investing. 

Why Trade Goldman Sachs Stock?

In Goldman Sachs’s most recent earnings report published on 18 July, the bank posted profit and revenue that beat analyst estimates. Earnings per share came in at $7.73 vs an expected $6.58 while revenue came in at $11.86 billion vs an expected $10.86 billion.  

While second-quarter profits fell in its investment banking division – a slow down seen industry-wide – the bank’s fixed income operation generated $3.61 billion in revenue due to “significantly higher” trading activity in currencies, commodities and interest rates.  

The trends experienced in Goldman’s report have also been highlighted in other banks’ earnings reports. For example, many mergers and IPOs have been shelved due to the current economic environment causing a slowdown in its deal-making divisions.  

However, Goldman is considered to be a well-diversified bank so losses in one division have been offset by profits in another division.  

Data from the 13F filing report of 203 hedge funds submitted to the Securities & Exchange Commission (SEC) shows that hedge funds increased their positions by 931.8k shares in the last quarter.  

Source: TipRanks, 18 July 2022 

While there are some positive takeaways from the earnings report most banks have struggled this year. Goldman shares are down more than 23% on the year. If the US can avoid a recession, then higher interest rates may help to boost margins over the next few quarters.  

However, many analysts point to the fact that there is a high probability chance of a recession if interest rates continue to rise but economic growth does not pick up. In fact, banks such as JP Morgan and Wells Fargo both announced it is setting aside more funds for expected loan losses from consumers and businesses.  

Goldman Sachs Stock Forecast - What do the Analysts Say? 

According to analysts polled by TipRanks for a Goldman Sachs stock forecast in the past 3 months, there are currently 9 buy, 4 holds and 0 sell ratings on the stock. The highest price level for a Goldman Sachs stock forecast is $425.00 with the lowest price target at $325.00. 

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

Source: TipRanks, 18 July 2022 

An Example Trading Idea for the Goldman Sachs Stock Price

An example trading idea for the Goldman Sachs share price could be as follows:  

  • Buy the stock on a break above $314.00 to allow for current market volatility. 
  • Target just below the average analyst price target at $373.00. 
  • Keep your risk small at a maximum of 5% of your total account.   
  • Time Line = 1 – 6 months  
  • If you buy 10 Goldman Sachs shares:  
    • If target is reached = $590.00 potential profit ($373.00 - $314.00 *10 shares).   

It’s wise to remember that the share price is unlikely to go up in a straight line and it may even go much further down before it rises, especially considering the recent sell-off in global stock markets.  

Therefore, be sure to exercise good risk management which is one of the most important aspects of trading successfully. You should always know how much you could potentially lose on a trade and the risks involved.  

Another factor to consider is the commission which can eat into your profits. With the Admirals Invest.MT5 account you can buy US stocks from $0.02 per share. This means buying 10 shares in Goldman Sachs stock would result in a commission of $0.20 ($0.02 * 10 shares).  

There is a low minimum transaction fee of $1. So, the example trading idea above would result in a commission of just $1 overall! 

How to Buy Goldman Sachs Stock in 4 Steps  

With Admirals, you can buy shares in companies like Goldman Sachs with a low commission of just $0.02 per share and a low minimum commission of just $1 on US stocks. 

  1. Open an account with Admirals to access the Trader’s Room.   
  2. Click on Trade on one of your live or demo accounts to open the web platform.   
  3. Search for your stock at the bottom of the Market Watch window and drag the symbol onto the chart.   
  4. Use the one-click trading feature, or right-click and open a trading ticket to input your trade size, stop loss and take profit level.   

Source: Admirals MetaTrader 5 Web. Past performance is not a reliable indicator of future results, or future performance. 

Click on the banner below to buy Goldman Sachs stock today! ▼▼▼ 

Do You See the Goldman Sachs Stock Price Moving Differently?   

Remember that all analytics and trading ideas are based on the personal view and experience of the author.  

If you believe there is a higher chance Goldman Sachs's share price will move lower, then you can also trade short from a CFD (Contracts for Difference) trading account which Admirals also provide.  

The Trade.MT5 and Trade.MT4 account allows you to speculate on the price direction of stocks and shares using CFDs.  

This means you can trade long and short to potentially profit from rising and falling stock prices. Learn more about CFDs in this How to Trade CFDs article. 


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Jitanchandra Solanki
Jitanchandra Solanki Financial Markets Author, Admirals London

Jitanchandra is a financial markets author with more than 15 years experience trading currencies, indices and US equities. He is an accredited Market Technician with a BA Hons degree.