Courtesy of Benzinga.
The release of the new Apple credit card by Goldman Sachs Group, Inc (NYSE: GS) shows the legacy Wall Street firm’s interest into expanding into the world of the digital storefront, but is a small move that isn’t likely to be a game-changer for the venerable bank, or the industry, Wells Fargo said.
The Analyst
Wells Fargo’s Mike Mayo has an Outperform rating on Goldman Sachs with a $250 price target.
The Thesis
The card co-branded with Apple Inc. (NASDAQ: AAPL) should provide a couple of positives for Goldman Sachs, Mayo wrote in a note to investors.
First, it could show that Goldman can leverage its well-known brand, and its tech savvy, to build a business from scratch with a partner. Second, it could expand the pool of potential customers, because more than 100 million Americans likely have an Apple product and could be in line to be solicited for the card. That jump-starts customer acquisition in the venture, often one of the most expensive parts of growing a consumer business.
“Goldman’s ability to start a business from scratch and partner with such an iconic brand should reflect its potential to out fin-tech the fin-techs and out-bank the banks,” Mayo said.
But the financials don’t show any way that the Apple Card contributes more than 3% of earnings or so, he said, so it’s “not likely to move the needle too much at Goldman.”
The card should be relatively attractive for consumers with a generous cash-back offer. But the overall utility to Goldman Sachs isn’t completely clear. Mayo noted Citigroup Inc (NYSE: C) turned down the Apple Card, saying the economics wouldn’t work.
Price Action
Shares of Goldman Sachs were down 3.3% at $202.16 Monday afternoon.
Related Links:
Apple, Goldman Sachs To Launch Credit Card In August
Analyst: Apple’s New Credit Card Bodes Well For Green Dot
Latest Ratings for GS
Date | Firm | Action | From | To |
---|---|---|---|---|
Jul 2019 | Upgrades | Market Perform | Outperform | |
Apr 2019 | Upgrades | Sell | Hold | |
Apr 2019 | Maintains | Equal-Weight | Equal-Weight |
View More Analyst Ratings for GS
View the Latest Analyst Ratings
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