Costco offers discounted gift cards for Uber, Instacart, and DoorDash amid slowdown concerns

Costco Wholesale Corporation (NASDAQ: COST) is enhancing its lineup of discounted gift cards by adding Uber, Instacart, and DoorDash to its offerings.

This strategic move, highlighted by Oppenheimer analyst Rupesh Parikh, is designed to keep cost-conscious consumers engaged as concerns about an economic slowdown loom large.

With Americans becoming more cautious about discretionary spending, Costco is leveraging value-driven initiatives to maintain its competitive edge.

$100 gift cards for Uber, Instacart, and DoorDash

The addition of discounted gift cards is part of Costco’s broader effort to bolster its non-food business.

The retailer is offering $100 gift cards for Uber, Instacart, and DoorDash at a reduced price of $79.99, which Parikh notes has already contributed to meaningful improvements in non-food category trends.

This strategy is helping Costco stand out in a challenging retail environment.

Earlier this year, Costco introduced gold bars as part of its non-food expansion strategy, which has proven to be a lucrative addition.

According to a Wells Fargo estimate, gold bars are now generating over $200 million in monthly sales.

The momentum in Costco’s non-food categories has been building over the past two months, and Parikh expects this growth trajectory to continue.

Costco membership price hike

In July, Costco raised the price of its standard annual membership in the US and Canada by $5, with the executive plan seeing a $10 increase.

Despite these price hikes, Costco’s stock has performed exceptionally well, rising about 40% since the beginning of 2024.

The company’s focus on value, combined with its ability to adapt to changing consumer behavior, has kept its stock in high demand.

Oppenheimer’s Parikh recommends buying Costco stock on any dips, emphasizing its resilience and growth potential.

The stock currently offers a dividend yield of 0.51%, making it an attractive option for investors seeking both growth and income.

Should you buy Costco?

Another factor contributing to Parikh’s bullish outlook on Costco is the possibility of a stock split in the coming months.

Stock splits typically make shares more affordable and accessible to retail investors, which can increase demand and drive up the stock price.

Given Costco’s current trading level at an all-time high of $905, a stock split could serve as a significant catalyst for further price appreciation.

Investors are also looking ahead to Costco’s Q4 earnings report, expected in the final week of September.

The consensus estimate is for the retailer to earn $5.02 per share in the current quarter, up from $4.86 per share a year ago.

A strong earnings report could provide another boost to Costco’s stock, solidifying its position as a market leader.

Costco’s strategic expansion of its discounted gift card lineup, combined with its efforts to strengthen non-food categories, reflects the company’s proactive approach to navigating economic uncertainties.

With a potential stock split and a solid Q4 earnings report on the horizon, Costco remains a compelling investment opportunity.

Wall Street’s consensus “overweight” rating further underscores the retailer’s strong performance and growth prospects.