Costco, its stock, and the jerks in the financial media

[MickinMD ★]

Costco's business model is to make around 80% of its profit from membership fees alone so it can offer low prices on high-quality items.  Its membership renewal rate is a very high 92% each year and most of us who shop there rave about the advantages of shopping there even with the $60/yr membership fee that may rise in 2023 after 5 years of no increases, though its CEO says he won't do it if it appears the general economy is struggling.

There was a concerted attempt in the media to drive Costco stock down in the past week - surely so that the bastards responsible for the articles could scoop it up cheap before yesterday's Costco report on December sales and earnings.  For example: Costco stock may be nearing a ‘compelling tactical inflection point,’ analyst says which includes spun numbers and falsely beating the drum about things like "lowering sales growth at the warehouse king and the potential for that trend to continue in 2023 amid a sluggish economy."

On top of that, there are other false articles like Layoffs are sweeping Corporate America to kick off 2023 despite that fact that December jobs report: Payrolls rise by 223,000, unemployment rate falls to 3.5% where "The unemployment rate in December fell to 3.5%, and on an unrounded basis, the unemployment rate came in at 3.468%, the lowest since 1969."

Today. there are a bunch of rave reviews on Costco's December sale - trying to push the price up after a deluge of false-info articles on allegedly respected sites tried to push it down.  The idea apparently is: drive the price down, buy it, then pump-and-dump.

Costco stock is up 7% today at 10:20 am EST with the news:

Costco stock bounces off 6-month low after upbeat December sales

Costco same-store sales, total comparable sales increase in December

Costco, Bed Bath & Beyond Show the 2 Sides of Retail - where BBB is warning it may go out of business

If you're going to invest, use financial media articles as a starting point only - do your own research while investing in stocks.

 

[donkpow]

It's all rock and roll to me. You can't make money if nothing happens.

[Razors Edge ★]

41 minutes ago, donkpow said:

It's all rock and roll to me. You can't make money if nothing happens.

Every investment firm has folks that focus on sectors and players in the sector. I figure there are a crap ton of analysts writing about Costco, and they can't all write the exact same boring nonsense. So, there have to be some nuance to their reports, and from that nuance, you can start picking and choosing what you want to report on.  "Bad" news generally sells, so it's no surprise that some negative news about Costco would make it to the top of the pile, and the boring "good" stuff would drop off.

[12string]

It's not about Costco.

It's just the thing to do right now.  Media is on a  roll, bashing the economy, rooting for a recession, it's so much more fun to get people all riled up.  So if a company reports good news, it must be spun to fit the narrative lest it be proven wrong.

Financial reporting has always been rather self-fulfilling.  You really have to pick and choose who to believe

[donkpow]

7 minutes ago, 12string said:

You really have to pick and choose who to believe

I don't believe any of it. I use it to point me where to investigate. 

Business is sales and sales is business. They say one cannot be CEO without being an expert in sales. All this stuff about stock brokers making money and huge annual bonuses, those guys just sell stocks. Lots of stocks! And they sell it to guys like @MickinMD Who can call it insider trading if one broker talks to another over lunch. One sells, one buys. The good ol' boy network. 

If you want to evaluate a company, do it. The results have very little to do with stock prices. Just look at all the PE numbers from last year. Meaningless! There's only one thing that matters, who will pay for what, when, and how much. That's the market for you.

I'm not against owning a company for investment purposes. If you want the price to increase, let the market do its thing. Good companies will out perform. Fact of life.