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Shares in Goldman Sachs are down by over 12% in 2014, as the outlook for revenue and profits has fallen away.
One of the bigger issues currently being faced by the US investment bank is the possibility it will have to shut down its Sigma X trading platform. Questions have been increasing over the last quarter about the way that ‘black box’ automated trading programs work alongside high frequency trading, and the implications this may have for ordinary investors. The Sigma X platform is a venue for trading private stock positions; an in-house product not available to the broader market. The final decision has not yet been reached, but it would certainly be a loss for the US bank’s annual returns should this be shut down.
One area where the firm could expect to benefit is the increasing IPO market as more companies come to the market to gain a quote. As one of the city’s largest corporate advisors, Goldman Sachs will have benefited from this upturn in fee generation.
First-quarter earnings are expected at $3.48, down year-on-year from $4.29. Revenue is also anticipated to have fallen by almost 25%. Unlike years previously, the bar has been set relatively low for these quarterly figures, and the share price is back down to lows last seen in July 2013. Although not oversold, the stock is not far off it and could be due a correction after a particularly weak first quarter.