CoStar pushes back on ‘short-sighted’ call to ditch Homes.com 

CoStar Group has rejected the claims publicized by activist investor Third Point this week, which include a harsh rebuke of the commercial real estate giant's failure to rein in management and its heavy investment in Homes.com.

CoStar fires back at Third Point

In a sharply worded statement released Wednesday, CoStar said Third Point's criticisms mischaracterize both the company's governance reforms and its long-term strategy. CoStar describes the activist's narrative as "spinning a yarn" that is "completely detached from reality," and seeks to clarify and reaffirm Homes.com's role in CoStar's corporate strategy. 

"Third Point's demand that we abandon Homes.com reflects their complete misunderstanding of our business, industry, and the strong progress we are making," the letter from CoStar reads. "Third Point would have you believe that Homes.com could be jettisoned or shut down with no negative impact on our business or competitive positioning."

Board changes, buybacks and a pullback on spending

CoStar said it has spent the last nine months engaging with shareholders representing a vast majority of its outstanding shares — including Third Point — and that those conversations directly informed its decision, announced earlier this month, to reduce spending on Homes.com as it looks to boost overall profitability.

The company said it plans to reduce its net investment in Homes.com by $300 million in 2026 and by more than $100 million annually thereafter, targeting breakeven profitability by the end of 2029.

CoStar also pointed to a more aggressive capital return strategy, including the acceleration of a $500 million share repurchase program launched in 2025 and the authorization of an additional $1.5 billion buyback earlier this year.

Those announcements followed last April's moves, prompted by investor pressure, to add three new independent directors to the CoStar board — two of whom were designated by Third Point and D.E. Shaw — and name a new independent board chair. CoStar also agreed last year to form a capital allocation committee and overhauled its executive compensation program to include more quantitative performance targets and greater transparency.

Homes.com, AI and the long-term bet

CoStar outright dismissed Third Point's argument that Homes.com should be abandoned. The company said residential data and marketplaces are essential to its broader digital ecosystem and that Homes.com materially expands its addressable market to more than $100 billion while strengthening other platforms, including Apartments.com.

CoStar's planned AI-driven tools tied to Homes.com have also begun to factor into Wall Street's outlook. Analysts have pointed to the company's efforts to deploy artificial intelligence across its residential and commercial platforms as a potential long-term differentiator, even as questions remain about adoption, execution and near-term returns.

According to CoStar, Homes.com subscribers have increased 337% since the first quarter of 2024. With the heaviest spending now behind it, the company said the platform is positioned to scale revenue with lower capital intensity.

Part of a consistent strategy

CoStar framed its investment in Homes.com as consistent with its long-standing acquisition strategy, noting that over the past 15 years it has acquired more than 40 businesses for roughly $7.3 billion, generating internal rates of return between 17% and 39% on major investments.

The company also highlighted its 2026 financial outlook as evidence that its strategy is gaining traction. At the midpoint of guidance, CoStar expects $3.8 billion in revenue, up 18% from 2025, and adjusted EBITDA of $770 million — an 83% increase year over year.

CoStar closed by questioning Third Point's track record, noting that the hedge fund has underperformed the Russell 3000 in nine of the past 10 years, and reaffirmed its commitment to what it described as disciplined, long-term value creation — with Homes.com remaining central to that vision.