The much-hyped credit card features the industry's lowest interest rate range for comparable cards and has no fees. In addition, Goldman has a mandate to approve as many iPhone users as possible.
That means the Apple Card portfolio may "generate lower revenue and face higher loss content relative to the industry average," Carcache wrote in a note to clients.
He estimates that it will take four years for the bank to break even on a customer, by which time the economy could stall and loan losses rise.
“By definition, credit businesses are cyclical, and we would expect Goldman Sachs to face its fair share of volatility in the next recession," Carcache writes.
Over time, Goldman's loan losses on the Apple portfolio will probably settle between the card portfolios of Capital One and Discovery Financial, he estimates.
Carcache speculates that Apple and Goldman could offer a debit card next.
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