Goldman Sachs (GS) Q1 EPS Nearly Doubles Wall Street's View as Investment Banking Excels Amid SPAC and IPO Frenzy

April 14, 2021 8:52 AM EDT

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Shares of Goldman Sachs (NYSE: GS) are up about 1.5% in pre-market Wednesday after the company reported better-than-expected results for its first quarter.

Goldman Sachs reported Q1 EPS of $18.60 to crush the $10.22 expected from market analysts. Revenue for the quarter came in at $17.7 billion, again higher than the consensus estimate of $12.61 billion.

“Our businesses remain very well positioned to help our clients reposition for the recovery, and that strength is reflected in the record revenues and earnings achieved this quarter,” CEO David Solomon said in the earnings release.

The strong performance was fueled by high demand seen in the hot IPO market, SPAC mergers, as well a pandemic-driven surge in demand for stock trading. According to Refinitiv, global investment banking fees hit an all-time record of $39.4 billion during the March quarter, according to Refinitiv data.

Along these lines, the investment banking revenue exploded 73% to $3.77 billion, the highest level recorded in the past 11 years. Similarly, equities trading soared 68% to $3.69 billion as a jump in trading by ordinary investors fed stock market volatility. Goldman is still the highest-ranked player in the M&A field.

The company also said debt underwriting was fueled by high demand for leveraged finance and asset-backed activity, while the booming IPO market helped equity underwriting revenues. Fixed income came in at $3.89 billion, the bank said.

“The increase in Underwriting net revenues was due to significantly higher net revenues in both Equity underwriting, primarily driven by strong initial public offerings activity. The increase in Financial advisory net revenues reflected a significant increase in completed mergers and acquisitions transactions,” the bank said in a statement.

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