Is Costco Wholesale Corp. (COST) Splitting in the Near Future?

As the stock market continues to soar, many companies are opting to split their shares to make them more affordable for retail investors. However, one prominent stock that has yet to join the trend is Costco Wholesale Corp. (COST). With its share price reaching the $1,000 mark, investors are wondering if a stock split is in the cards for the retail giant. Let's explore the reasons behind Costco's hesitation and whether a split is likely in the near future.



Costco management has cited two primary reasons for not splitting the stock in the near term:

1. Fractional Share Buying: Costco CFO Gary Millerchip mentioned that the economic arguments for stock splits are less clear now because retail investors and employees can buy fractional shares. This allows investors to buy shares according to a specified dollar amount, rather than a whole number of shares. Fractional share buying has become mainstream since 2019, making stock splits less necessary for accessibility.
2. Stock Feeling More Affordable: While Costco recognizes the benefit of the stock feeling more affordable for retail investors and employees, they are still evaluating the situation over time. This suggests that while they understand the appeal of a lower share price, they are not yet convinced that a split is necessary or beneficial.

In the future, these reasons might change if:

* Fractional share buying becomes less accessible or popular, making stock splits more appealing again.
* The stock price continues to rise, potentially making it less affordable for some investors, even with fractional share buying.
* There is increased pressure from investors or employees to make the stock more accessible.
* Costco's management strategy changes, and they decide to "join the crowd" of companies that have recently split their stocks.