Costco’s stock grind-up rides on executive members, not just new sign-ups

Costco Wholesale’s shares have been “treading water” lately, even as investors focus on a slowdown in new member sign-ups after years of rapid growth. According to a recent analysis, the pace of new members joining Costco has cooled, and the stock was trading about 13% below its 5-week high as the market weighed whether membership momentum is fading.

In the most recently reported quarter, Costco’s total paid membership count grew 4.1%. On an earnings-call discussion highlighted in the analysis, that growth rate was described by a top analyst as the “lowest level in some time,” a framing that sounds troubling for a membership-fee business that relies on keeping shoppers coming through its doors.

But the analysis argues the headline figure can obscure a more important trend inside the membership base. It points to executive memberships, the premium Costco tier that charges more and offers additional benefits including an annual reward. In that segment, paid executive memberships grew 9.6% in the quarter, more than double the overall member growth rate.

Executive members matter because they tend to be stickier and spend more. The analysis attributes Costco’s own commentary to the idea that when shoppers upgrade into the executive level, they generally spend more and visit more frequently, helping deepen engagement with Costco’s assortment and services.

That dynamic changes how investors interpret slower total membership growth. Instead of relying primarily on enrolling new shoppers at a steady clip, Costco can benefit from “upselling” higher-paying customers within its existing base. In the analysis’s telling, the key is not only getting more members overall, but shifting more shoppers into the tier Costco describes as more valuable.

Still, the post leaves some questions unanswered about what, specifically, Costco is doing to drive upgrades. It suggests management is actively pulling levers to make the executive upgrade more compelling, but it does not lay out those levers in the text available for this review. Without that detail, it is harder for outsiders to judge whether the upgrade acceleration reflects pricing, promotions, assortment changes, reward structure, or other customer-behavior forces.

For markets, the takeaway is that Costco’s “membership slowdown” headline may not fully capture the economics of the customer base. If executive memberships continue to outpace total membership growth, investors may view the fee stream as more resilient than new-sign-up data alone would imply.

What to watch next is whether Costco’s executive tier growth remains strong in coming quarters and whether total paid membership growth continues stabilizing at a lower rate. Any shift in the spread between executive-member growth and overall membership growth would likely influence how the market values the retailer’s membership model.