Morgan Stanley has projected a significant membership increase for Costco (COST, Financial) following the introduction of membership card scanners across its U.S. clubs. This initiative is being compared to a "Netflix moment," where tightened controls on account sharing could substantially enhance the membership base.
According to analyst Simeon Gutman, Morgan Stanley’s channel checks indicated that during the trial phase of the card scanners, select Costco locations experienced a double-digit growth in membership. The new technology is being implemented in all U.S. clubs, and Gutman anticipates that this could drive higher membership fee revenues for Costco in upcoming quarters.
Gutman suggests that by converting non-paying customers to paying members, primarily in North America, Costco could potentially add 4 million members. This conversion could elevate its global user base by approximately 5% from the current 76 million members.
Costco has already predicted an increase in annual membership fees, which is expected to contribute positively to its revenue streams. The impact of these fee hikes will become more apparent over the next 24 months, peaking in the first quarter of 2026, as the fee increases are rolled out gradually.
