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  • Frank Tian

🍺 Someone just won a beer over Apple Card.

As many are surprised that Goldman Sachs lost $1B over its Apple card portfolio, some are not.


Who are they?


The new deal teams at the largest retail credit card operators - Citi, JP Morgan Chase, Synchrony (previous GE Money), and Barclay.


Goldman Sachs has been a giant in investment banking, but was a little guy in retail banking, especially in retail credit cards.


The veterans were all in the bidding for the Apple credit card partnership, but eventually pulled out.


Why?


Because Goldman Sachs wanted the deal so badly, it pushed the financial terms to a degree all the experienced ones did not think it makes sense.


Of course, one can always argue it is a strategic play vs. a financial play:


A quick way to make a name by leveraging a well-known brand and its huge fan base.


However, even a strategic play has to pay off at some point of time. Wall Street is not known to be patient.


Does Goldman Sachs have a risk issue?


Not much - when you compare the risk metrics vs. the industry.


Just an expensive deal.


It is never easy to juggle decent profit, fast growth, and effective operations.


It is even more so for new players in the partnership business.


That is why someone confidently bet a beer. And won.


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