Here's How Much Investing $1,000 In Costco's IPO Would Be Worth Today

Investors who have bought and held U.S. stocks over the very long term have historically done very well. In fact, the S&P 500 is up 1,510% over the past 35 years.

While that return is certainly impressive, Costco Wholesale Corporation COST investors have done even better.

Costco’s Big Debut

Membership-only warehouse giant Costco was founded in 1983 and made the move to go public just two years later. It priced its IPO at $10 per share on Dec. 1, 1985. At the time of its IPO, the company was valued at $1.27 billion.

The original Costco location was opened in Seattle Washington in September of 1983. By the end of 1984, Costco had nine locations in five different states.

In 1993, Costco rejected a buyout offer by Walmart Inc WMT to merge Costco with Sam’s Club. Later that same year, Costco merged with Price Club, and the combined company had 206 locations generating $16 billion in annual sales. Today, Costco has grown to 785 locations, including 239 international warehouses.

Costco has issued three stock splits in 1991, 1992 and 2000 at a combined ratio of six-to-one. That means Costco’s adjusted IPO price based on today’s structure was only about $1.67. All the stock prices mentioned below are on this split-adjusted basis.

New Millenium

By the end of the 20th century, Costco shares had traded as high as $98.75 as the dot-com bubble drove the entire market higher. When the bubble burst, Costco shares dropped back down to as low as $25.94 in mid-2000, their lowest point of the 21st century.

Costco finally made new all-time highs in 2012, and has continued its bullish momentum even though much of the retail sector has struggled in the e-commerce era.

In fact, Costco hit its all-time high of $325.26 earlier this year prior to the COVID-19 market crash.

2020 And Beyond

Costco shares have since pulled back to around $305, but the stock has still been a home run for IPO investors.

In fact, $1,000 worth of Costco IPO stock in 1985 would be worth about $182,413 today. In addition, these Costco IPO investors would have earned $15,018 in dividends over the past 35 years and could have gotten an even higher total return had they reinvested their dividends along the way.

Looking ahead, analysts expect Costco to grind even higher in 2020. The average price target among the 26 analysts covering the stock is $329 suggesting 8.2% upside from current levels.

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Photo credit: Tony Webster, via Wikimedia Commons