Goldman Sachs set to take a loss on GreenSky sale

Goldman Sachs is expected to sell GreenSky at a painful loss, Google partners with Stripe to enable payments in Google Calendar, and Apple aims to launch Apple Pay in India

June 26, 2023 • Estimated Reading Time: 9 minutes

Hi!

Hope you had a great weekend! I remember how everyone in the Fintech industry was concerned with Goldman Sachs entering the consumer lending space (circa 2015). Goldman had an engineering muscle and unlimited access to capital, so the industry players expected a strong competitor. Seven years later, Goldman Sachs is exiting the space…without achieving much. “Fintech is easy,” said no one ever.

  • Goldman Sachs set to take a loss on GreenSky sale,

  • Google partners with Stripe to enable payments in Google Calendar, and

  • Apple is working towards the launch Apple Pay in India

Thank you for reading and have a great week!

Jevgenijs

Goldman Sachs Is Expected to Sell GreenSky at a Painful Loss

Goldman Sachs (NYSE: GS) is expected to take a large writedown on the sale of the home improvement lender GreenSky, according to CNBC. The bank bought GreenSky for $2.24 billion in 2021 to expand its consumer finance operations; however, after facing mounting losses and pressure from investors, CEO David Solomon decided to sell the business. “We have been clear in our aspiration for Marcus to become the consumer banking platform of the future, and the acquisition of GreenSky advances this goal,” commented Solomon on the acquisition of GreenSky in 2021.

Asset managers and lenders such as KKR, Apollo Global Management, Sixth Street Partners, Warburg Pincus and Synchrony Bank were among the bidders in the first round of bids. The negotiations are ongoing with a smaller group of bidders in hopes of increasing the final price. Goldman has been pursuing separate offers for GreenSky's loan origination business and its existing loans, as well as considering a single deal. This development is the result of Solomon's strategic shift away from consumer efforts and his aim to transform Goldman Sachs into a Fintech disruptor.

Google Partners with Stripe to Enable Payments in Google Calendar

Google has partnered with the payment giant Stripe to enable paid appointment bookings through Google Calendar. This collaboration leverages Stripe’s Connect and Checkout platforms, and allows customers to make payments while scheduling appointments in Google Calendar. Businesses can connect their Stripe accounts, set prices, and offer clients the option to book and pay for services within Google Calendar, restricting access to meetings until payment is made. The paid appointment booking feature will be rolled out globally to selected Google Workspace subscribers.

Source: Stripe

It’s been a busy year for Stripe, which announced new partnerships with Uber and Airbnb, entered credit card market with a charge card program, as well as raised $6.5 billion in new funding at a $50 billion valuation. In April, Stripe released its 2022 annual letter, disclosing that the company processed over $817 billion in payment volume in 2022, which represents a 26% increase from the previous year. Stripe currently powers more than 100 companies that process over $1 billion in payments annually and onboards “more than 1,000 new companies every day”.

Apple Aims to Launch Apple Pay in India

Apple (NASDAQ: AAPL) has restarted talks with Indian authorities and officials about the launch of its payment service, Apple Pay, in India, according to Techcrunch report. The company is planning to develop a localized version of Apple Pay that will work with UPI (Unified Payments Interface), an instant payment system developed by National Payments Corporation of India, and will use Face ID for UPI authentication. Apple aims to enable iPhone users in India to scan QR codes and initiate UPI transactions without using any third-party apps.

The launch date and partners for Apple Pay in India have not been finalized yet; however, introduction of the service is not likely to disrupt the existing payment ecosystem, which processes “more than 8 billion transactions a month” and is dominated by Walmart's PhonePe, Google's GPay, and Paytm. In April, Apple opened its first retail store in India, marking a significant milestone for the company in the South Asian market. The move comes as Apple aims to increase its presence in Asia's second-largest economy and compete with Samsung in the luxury smartphone market.

Two charts from me again. Somehow I missed that Shopify overtook PayPal in market capitalization in early May. As of Friday close, Shopify’s market cap was $81.44 billion compared to PayPal’s $74.69 billion. This makes its the largest Fintech company out there, if we exclude Visa ($470 billion) and Mastercard ($360 billion).

However, there is more to this story…Shopify went public on May 20, 2015, and PayPal went public on July 20, 2015 (the second time). Since then Shopify stock appreciated 2,384%, while PayPal stock appreciated 82%. Imagine yourself making a bet on PayPal instead of Shopify in 2015 🤷🏻‍♂️

Cover image source: Goldman Sachs

Disclaimer: Information contained in this newsletter is intended for educational and informational purposes only and should not be considered financial advice. You should do your own research or seek professional advice before making any investment decisions.

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