Costco Stock Price Fluctuations Raise Investor Concerns
Written by Emily J. Thompson, Senior Investment Analyst
Updated: Jun 09 2026
0mins
Source: Fool
- Significant Sales Growth: Costco reported a 14% year-over-year increase in May sales, reaching $24 billion, with net sales up 10% for the first 39 weeks, indicating strong market demand and an expanding customer base.
- Strong Digital Sales: Digital sales surged 21% year-over-year in May and maintained the same growth rate through the first 39 weeks, showcasing the company's excellent performance in e-commerce, which contributes positively to overall sales figures.
- Stock Price Fluctuation Reasons: Despite strong sales and earnings reports, Costco's stock price briefly rose to $997 on June 5 after the sales report, but then fell back to around $960 due to an overall market sell-off, raising investor concerns about high valuations.
- Gross Margin Decline: Although the results were impressive, the overall gross margin dropped by 21 basis points, partly due to price reductions on key items and rising transportation costs, which raised market concerns about future profitability.
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Analyst Views on COST
Wall Street analysts forecast COST stock price to rise
24 Analyst Rating
19 Buy
4 Hold
1 Sell
Strong Buy
Current: 957.680
Low
769.00
Averages
1061
High
1205
Current: 957.680
Low
769.00
Averages
1061
High
1205
About COST
Costco Wholesale Corporation (Costco) operates membership warehouses and e-commerce sites that offer a selection of nationally branded and private-label products in a wide range of categories. The Company buys the majority of its merchandise directly from suppliers and route it to cross-docking consolidation points (depots) or directly to its warehouses. It operates 891 warehouses, including 614 in the United States and Puerto Rico, 108 in Canada, 40 in Mexico, 35 in Japan, 29 in the United Kingdom, 19 in Korea, 15 in Australia, 14 in Taiwan, seven in China, five in Spain, two in France, and one each in Iceland, New Zealand and Sweden. It also operates e-commerce sites in the United States, Canada, the United Kingdom, Mexico, Korea, Taiwan, Japan and Australia. The Company provides wide selection of merchandise, plus the convenience of specialty departments and exclusive member services.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
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See More
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- High Membership Renewal Rate: The renewal rate for memberships in the U.S. and Canada reached 92.2%, improving by 10 basis points from the previous quarter, reflecting strong consumer loyalty and value recognition, which further solidifies Costco's market position.
- Strong Same-Store Sales: Same-store sales increased by 9.8%, with a healthy 6.6% growth excluding the impact of rising gas prices, indicating consumer focus on value in a high-inflation environment, which also contributed to a 2.4% increase in foot traffic.
- Complex Market Reaction: Despite revenue exceeding analyst expectations, the diluted earnings per share matched forecasts, leading to a complex market reaction; investors must carefully assess the current price-to-earnings ratio of 47.8 to avoid the risk of overpaying for the stock.
See More
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- Membership Renewal Rate Improvement: The renewal rate for U.S. and Canada memberships reached 92.2%, up 10 basis points from the previous quarter, reflecting consumer recognition of Costco's value proposition and further solidifying its market position.
- New Warehouse Openings: The company opened four new warehouses last quarter, contributing to revenue growth; however, the robust same-store sales performance was the main driver, showcasing sustained consumer demand for low-priced goods.
- Stock Price Volatility Analysis: Despite revenue exceeding analyst expectations, the diluted earnings per share matched forecasts, leading to a more than 4% decline in stock price, prompting investors to carefully assess the current price-to-earnings ratio of 47.8 to avoid excessive investment risks.
See More
Surge in Options Trading Volume for ESAB and Costco
- ESAB Options Volume: ESAB Corp saw an options trading volume of 10,507 contracts today, representing approximately 1.1 million shares, which is about 126.9% of its average daily trading volume of 828,120 shares over the past month, indicating strong market interest in the stock.
- High Put Option Activity: Particularly notable was the $85 strike put option, with 3,500 contracts traded today, representing around 350,000 underlying shares, reflecting investor expectations of potential price declines in the future.
- Costco Options Dynamics: Costco Wholesale Corp also experienced significant options trading, with a volume of 30,186 contracts today, equating to approximately 3.0 million shares, or 119.8% of its average daily trading volume of 2.5 million shares over the past month, showcasing heightened investor attention on its stock performance.
- High Call Option Activity: The $1100 strike call option for Costco was particularly active, with 2,434 contracts traded today, representing about 243,400 underlying shares, indicating market optimism regarding its future price potential.
See More
Amazon Prime Membership Value Significantly Increases
- Membership Value Analysis: JPMorgan estimates that while the annual fee for U.S. Prime members is $139, the actual value exceeds $1,437, highlighting the immense appeal of membership services, particularly as subscriber growth slows.
- Cost Savings: In 2025, U.S. Prime members are projected to save an average of $550 on delivery fees, a 10% increase from the previous year, which not only enhances user satisfaction but also strengthens Amazon's competitive edge in a fiercely contested market.
- Global User Growth: Amazon is expected to reach 370 million Prime users worldwide by year-end, with 139 million in the U.S. and 231 million internationally, indicating significant potential in international markets where penetration could rise from 33% to 45%.
- Revenue Growth Potential: JPMorgan predicts that Prime Day could generate an incremental $7 billion to $8 billion in revenue for the second quarter, while potential future membership fee increases could drive an additional $3 billion in annual sales, demonstrating Amazon's ongoing profitability in membership services.
See More
Costco Testing Key Support Level for Potential Bounce
- Capital Flow Trend: As capital exits the tech sector, institutional investors are reallocating funds into stable sectors like Consumer Staples and Healthcare, with Costco being a heavyweight beneficiary in the XLP sector.
- Technical Analysis Strategy: The current approach avoids complex indicators, focusing instead on traditional support and resistance concepts, as Costco's stock price tests the historically significant support level around $950, indicating potential for a rebound.
- Trade Setup: To capitalize on the support bounce, a bull call spread targeting the 950/955 range is planned, set to expire on July 24, with a maximum potential profit of $250 while effectively capping downside risk.
- Market Reaction Expectations: Should Costco's stock price exceed $956, the trade strategy will adjust to the new price, ensuring profit opportunities remain intact amidst market fluctuations, further solidifying its position in the consumer staples market.
See More
Amazon and Costco: Top Picks for Long-Term Investment
- Amazon's Market Advantage: Amazon (AMZN) holds a massive market share in e-commerce and cloud computing, with a market cap of $2.6 trillion, and is poised for future growth driven by its strong global network and Prime membership service amidst the AI boom.
- AWS Growth Potential: Amazon Web Services (AWS), the world's largest cloud service provider, boasts an annual revenue run rate of $150 billion, benefiting from a surge in AI projects, which further solidifies Amazon's profitability and market position.
- Costco's Business Model: Costco (COST) is renowned for its membership-based low-price strategy, with a market cap of $422 billion and a renewal rate exceeding 92% in the U.S. and Canada, providing visibility for future profits.
- Expansion Plans and Profitability: With 928 stores globally and plans to open over 30 new warehouses annually, Costco's high-margin membership fees ensure long-term profitability and competitive strength, despite low margins on product sales.
See More
