Goldman Sachs Launches Digital Equity-Linked Notes Tied to Vistra Corp Stock Performance Through 2028

Structure and Maturity Profile of the Equity-Linked Notes

The Digital Equity-Linked Notes represent a structured product designed by GS Finance Corp. and guaranteed by its parent company, The Goldman Sachs Group, Inc. The notes mature on January 21, 2028, with settlement calculated based on the performance of Vistra Corp. common stock measured over five averaging dates in January 2028. The initial underlier level was established at $152.56, reflecting the closing price of Vistra Corp. stock on July 16, 2026, one day before the trade date. This mechanism ensures that the notes' payout depends entirely on how the stock price performs relative to this baseline measurement.

The notes carry no coupon interest, meaning investors receive no periodic payments during the holding period. Instead, all returns derive from the appreciation or depreciation of the underlier relative to the initial level. The calculation of the final underlier level uses an arithmetic average of the closing prices on each of the five designated averaging dates, a methodology that reduces the impact of volatility on any single trading day. The use of multiple measurement dates creates a smoothing effect that protects investors from potential price manipulation or unexpected market events concentrated on a single day.

Maximum Upside and Trigger Buffer Mechanics

Investors in these notes can realize a maximum settlement amount of $1,382 per $1,000 face amount, representing a potential 38.2% gain if the final underlier level equals or exceeds the trigger buffer level. The trigger buffer level is set at 70% of the initial underlier level, which translates to approximately $106.79 based on the initial $152.56 measurement. This 30% buffer means that Vistra Corp. stock can decline by up to 30% from its initial level and investors will still receive the maximum payout, provided the stock does not fall below this threshold. The trigger buffer structure is designed to allow investors to participate in gains while offering some downside protection against moderate losses.

The construction of this protective feature reflects market practice in structured equity products where issuers seek to balance investor appeal with hedging costs. By capping the maximum payout and establishing a buffer, Goldman Sachs can price the product competitively while maintaining manageable exposure to extreme moves in Vistra Corp. stock. Investors purchasing at the original issue price of $1,000 would need the Vistra stock to appreciate approximately 9% or remain above the 70% trigger buffer level to achieve the maximum payoff at maturity.

Principal Loss Mechanism and Downside Exposure

The notes employ a direct principal loss structure for scenarios where the final underlier level falls below the trigger buffer level. Under this mechanism, investors face losses calculated on a one-to-one basis with percentage declines in the Vistra stock price below the initial level. For every 1% decline in the final underlier level below the initial level of $152.56, investors lose 1% of their $1,000 face amount. This linear loss structure means that a 50% decline in Vistra stock would result in a $500 loss per $1,000 invested, or a 50% loss of principal.

Most significantly, the disclosure explicitly warns that investors "could lose your entire investment in the notes." This total loss scenario would occur if Vistra Corp. stock declined by 100% or more from the initial $152.56 level to zero or below. While a complete elimination of share value represents an extreme case, the structural design leaves investors exposed to substantial losses in the event of significant adverse price movement in Vistra Corp. stock. The notes carry both the credit risk of GS Finance Corp. as issuer and The Goldman Sachs Group, Inc. as guarantor, adding a layer of counterparty risk beyond the equity market risk inherent in the underlier.

Vistra Corp. as the Underlying Security and Power Generation Sector Exposure

Vistra Corp., identified by Bloomberg ticker VST UN, is the common stock underlying these equity-linked notes. Vistra operates in the power generation and energy production sector, a business that has attracted significant investor attention amid evolving energy markets and demand patterns. By structuring notes tied to Vistra stock performance, Goldman Sachs provides investors with a leveraged exposure mechanism to this sector, though with defined maximum upside and substantial downside risk. The choice of Vistra as the underlier suggests market demand among Goldman Sachs' client base for structured products connected to the energy transition and power generation themes.

The initial underlier level of $152.56 on July 16, 2026, establishes the baseline against which all performance is measured. Investors in these notes assume full exposure to Vistra stock price movements over the approximately 18-month holding period, subject to the maximum payout cap and trigger buffer floor. The five-date averaging mechanism helps smooth out volatility inherent in equity markets, though it cannot eliminate fundamental business or sector risks affecting Vistra's stock price trajectory through January 2028.

Pricing and Net Proceeds to the Issuer

GS Finance Corp. offered the Digital Equity-Linked Notes at an original issue price of 100% of face amount, with an underwriting discount of 1.25% of the face amount. This pricing structure means that for every $1,000 face amount purchased, investors pay $1,000, while the issuer retains net proceeds of $987.50 after deducting the underwriting compensation. The underwriting discount compensates Goldman Sachs & Co. LLC and JPMorgan, acting as placement agent, for distributing the notes to investors and structuring the offering.

However, the preliminary pricing supplement disclosed that the estimated value of the notes on the trade date was $900 to $930 per $1,000 face amount, representing a material discount to the original issue price of $1,000. This valuation gap indicates that investors purchasing at par receive notes worth substantially less than their purchase price based on Goldman Sachs' internal pricing models at the time of issuance. The disclosure states that investors receive "an additional amount" of undisclosed magnitude, though the specific figure and end date for this adjustment remain blank in the preliminary document, to be completed in the final pricing supplement.

Averaging Dates and Settlement Determination Process

The notes employ a five-date averaging methodology, with designated averaging dates of January 11, 12, 13, 14, and January 18, 2028. The January 18 date serves as both the final averaging date and the determination date for calculating the final underlier level. Settlement on the stated maturity date of January 21, 2028, occurs three trading days after the final measurement period, providing time for calculation and processing. The spacing of the averaging dates across a two-week period helps reduce the statistical risk that a single unusual market event or technical dislocation could disproportionately influence the payout calculation.

Goldman Sachs & Co. LLC serves as the calculation agent responsible for determining the final underlier level by computing the arithmetic average of Vistra stock closing prices on each of the five averaging dates. The methodology is straightforward: if the final averaged level meets or exceeds the trigger buffer level, investors receive the maximum $1,382 per $1,000 face amount; if below that threshold, investors receive $1,000 plus or minus the return calculation based on how far the average closed below the initial $152.56 level. The use of standardized calculation procedures helps ensure transparency and reduce operational risk in the settlement process.

Credit Risk and Guarantor Structure

The notes are issued by GS Finance Corp. but carry a full and unconditional guarantee from The Goldman Sachs Group, Inc., one of the largest global financial institutions. This guarantee structure means that even if GS Finance Corp. encounters financial distress, The Goldman Sachs Group, Inc. assumes the obligation to pay holders at maturity. Nevertheless, investors assume credit risk related to both the issuer and the guarantor; should The Goldman Sachs Group, Inc. itself experience severe financial difficulty, the ability to receive full payment could be compromised. The preliminary pricing supplement emphasizes that readers should review detailed risk disclosures on page PS-5 of the accompanying documents regarding the credit risk of both entities.

The notes are not bank deposits and are not insured by the Federal Deposit Insurance Corporation or any other governmental agency. They do not constitute obligations of, or are guaranteed by, any bank beyond the contractual guarantee from The Goldman Sachs Group, Inc. This distinction is material for investors comparing structured products to traditional bank savings vehicles, as the notes rely entirely on the creditworthiness and performance obligations of the Goldman Sachs entities involved, not on government deposit insurance protections.

Registration and Legal Framework Governing the Offering

The notes are issued under registration statement number 333-284538, filed with the U.S. Securities and Exchange Commission. The offering is governed by a series of governing documents including a prospectus dated February 14, 2025, a prospectus supplement dated February 14, 2025, and general terms supplement no. 17,745 dated January 20, 2026. The notes form part of the Medium-Term Notes, Series F program of GS Finance Corp. and are issued under the senior debt indenture dated October 10, 2008, as supplemented by the First Supplemental Indenture dated February 20, 2015, with The Bank of New York Mellon serving as trustee.

The preliminary pricing supplement itself, dated July 17, 2026, constitutes an update to these foundational documents and supersedes any conflicting information contained therein. The complete prospectus package provides comprehensive disclosure of terms, risks, and procedures governing the notes, though the material terms summary appears in this pricing supplement. Investors are directed to review all documents in conjunction with one another to obtain a complete understanding of the notes' structure and associated risks before making an investment decision.

Secondary Market Considerations and Valuation Dynamics

The disclosure notes that investors who sell the notes prior to the stated maturity date will realize returns dependent on secondary market value, which may differ substantially from the disclosed hypothetical payoff at maturity. Secondary market values are influenced by multiple factors including prevailing interest rates, volatility of Vistra Corp. stock, creditworthiness assessments of GS Finance Corp. and The Goldman Sochs Group, Inc., and overall demand for equity-linked structured products. Goldman Sachs & Co. LLC, as well as other Goldman Sachs affiliates, may engage in market-making activity in the notes after initial sale, providing liquidity but not guaranteeing consistent pricing or bid-ask spreads.

The preliminary pricing supplement explicitly states that unless otherwise informed by GS Finance Corp. or its agent, the prospectus is being used in market-making transactions following the initial offering. This means that investors should not assume access to continuous, liquid secondary market trading at transparent prices. The estimated value range of $900 to $930 per $1,000 face amount on the trade date suggests that secondary market pricing could reflect lower values than the par purchase price, particularly if market conditions shift or volatility in Vistra stock increases. Investors considering early exit should understand that realized returns may be negative despite holding to a point short of maturity.

Hypothetical Performance Scenarios and Investment Outcomes

The preliminary pricing supplement includes hypothetical examples illustrating how various Vistra stock closing levels on the averaging dates could affect settlement amounts. These examples operate under stated assumptions including purchase at original issue price on the original issue date, holding to stated maturity, no market disruption events, and no changes affecting the underlier. The examples are designed for illustrative purposes only and are explicitly noted not to constitute predictions of future investment results. Actual performance will depend on specific Vistra stock prices on the five averaging dates in January 2028, which remain unknown at the time of purchase.

The disclosure warns that the actual final underlier level may differ materially from the initial $152.56 baseline. Investors holding the notes must monitor Vistra stock price movements throughout the holding period and understand the sensitivity of their investment returns to concentration risk in a single company's stock performance. The hypothetical examples demonstrate the mechanics of gain and loss calculation but do not reduce the fundamental uncertainty regarding whether Vistra stock will remain above the 70% trigger buffer level or decline into the loss zone by the time the five averaging dates are measured in January 2028.