Markets are turning profitability screws on companies, says Goldman Sachs CEO

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David Solomon talks Europe’s negative interest rates, investor day, increased discipline and that small WeWork matter

David Solomon. Picture: REUTERS/LUCY NICHOLSON

“It’s important for people to grow, but there’s got to be a clear and articulated path to profitability,” Solomon said in a Bloomberg TV interview with Matt Miller in Berlin. “I think there’s a little more market discipline coming into play.” Solomon stopped short of comparing the recent troubles in the market for IPOs to the dot-com crisis, though they underscore how, after years of ultra-loose monetary policy, markets are demanding proof that companies can make money.

When we look back on negative rates, I think when the book’s written, it’s not going to look like a great experiment“Different people will have different valuations and parameters,” Solomon said. Still, “when you run an IPO process and you get an IPO process to the point where a valuation range is set and then you are actually selling securities to investors, I don’t think it’s that hard to get to a pretty narrow range for what the market expects and where buyers and sellers can meet”.

 

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