Costco: A Stock Split and the Illusion of Wealth

Costco Warehouse

They say the devil is in the details. Perhaps he also audits quarterly earnings. Costco Wholesale, a behemoth of bulk bargains, is whispered about as a potential candidate for a stock split. A split! As if rearranging deck chairs on the Titanic could alter the inevitable. The masses, predictably, are agog. They dream of multiplication, of a suddenly swollen share count, mistaking quantity for actual wealth. A most curious delusion.

Costco has, indeed, proven generous to its shareholders. A steady climb, a respectable return. But let us not confuse performance with magic. The siren song of a stock split is precisely that – a song, alluring but ultimately hollow. It’s a conjurer’s trick, diverting attention from the true engines of prosperity. A bit of accounting sleight of hand, nothing more.

Imagine, if you will, that you possess ten shares of Costco, each currently trading around nine hundred and sixty dollars. A handsome sum, certainly. Nine thousand, six hundred dollars to be precise. Now, let us indulge in a bit of fantasy. Costco announces a four-for-one split. The accountants rejoice! The public gushes! Suddenly, you possess forty shares! A glorious multiplication! But here’s the rub, the subtle twist of the knife. The price of each share now hovers around two hundred and forty dollars. Let us calculate. Forty shares multiplied by two hundred and forty dollars… and lo, we arrive back at nine thousand, six hundred dollars. The same nine thousand, six hundred dollars. A most exquisite illusion. A phantom wealth.

One might argue that a lower share price makes the stock more accessible to smaller investors. A noble sentiment, perhaps. But accessibility does not equate to prosperity. It merely broadens the base of those participating in the same, ultimately predictable, game. The wolves still feast, my friends, they simply invite a few more sheep to the table.

Regardless of whether the bean counters in Issaquah decide to tinker with the share count in 2026 – and frankly, it seems a rather trivial pursuit – Costco remains a formidable enterprise. They understand a fundamental truth: treat your employees well, offer your customers reasonable value, and the shareholders will, eventually, benefit. It’s a remarkably straightforward formula, yet so many companies seem determined to complicate it. They reward the executives with golden parachutes while the rank and file subsist on crumbs. They inflate prices while preaching austerity. Costco, at least, appears to grasp the basics.

However, even a well-run machine can be overvalued. The current price-to-earnings ratio, hovering around forty-seven, is… optimistic, shall we say? A touch frothy. The cautious investor might be wise to wait for a correction, a moment of sanity in this increasingly irrational market. But then again, who ever made a fortune by waiting? Perhaps a measured, incremental approach is best. A little here, a little there. Or, if you already hold shares, cling to them. For the long haul, naturally. Unless, of course, you believe the entire edifice is built on sand. In which case, prepare for a rather spectacular collapse. And I, for one, wouldn’t want to be holding the bag.

2026-01-22 19:52

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