By Shaina Mishkin
CoStar Group, the commercial real-estate giant that has been building its residential real estate portal, should reconstruct its board and "immediately consider strategic alternatives for Homes.com," Third Point CEO Daniel Loeb wrote in a letter published Tuesday. CoStar stock was rising shortly after the market opened.
It's the continuation of an activist campaign that intensified last April. The hedge fund and D.E. Shaw entered into an agreement with CoStar last spring that saw several new board members appointed and established a capital allocation committee.
CoStar, which has long been helmed by founder Andy Florance, is known for its commercial real estate information and technology offerings. Its expansion into the residential real estate realm ramped up in 2024 with its investment in real estate portal Homes.com -- which came at a cost, Barron's reported recently .
In the Tuesday letter, Loeb criticized "disastrous capital allocation policies that allowed CEO Andy Florance to sink billions of shareholder dollars into an ill-conceived and hopelessly executed strategy to build an online classifieds business in the residential real estate (RRE) industry."
The activist battle is the latest upheaval in the landscape for companies with residential real estate listings portals. The space has been marked by consolidation, litigation, and the threat of disruption in recent years against the backdrop of sluggish home sales. ( News Corp, which owns Barron's, also operates home listings website Realtor.com though its subsidiary Move.)
CoStar earlier this month outlined its path to profitability for Homes.com, which called for "lowering the capital intensity of Homes.com" and reaching positive earnings before interest, taxes, depreciation, and amortization, or Ebitda, for Homes.com by 2030.
In an emailed response to Barron's, a CoStar spokesperson said the company "has conducted extensive engagement with stockholders to inform our updated strategic vision and capital allocation priorities" over the past year, and noted that those "have been unanimously approved by the Board and Capital Allocation Committee including members nominated by Third Point and D.E. Shaw."
CoStar has a "clear plan" to build its core offerings while scaling its residential real estate portal, which it called "a critical component to our comprehensive digital real estate platform and next chapter of profitable growth," the spokesperson said.
"Our 2026 and long-term guidance -- which represents sustained, accelerated revenue growth and margin expansion -- reflected the Board's confidence in our ability to enhance stockholder value," the CoStar spokesperson said.
In the Tuesday letter, Loeb wrote that he wants CoStar to focus on its commercial real estate business, which "has significant runway for double-digit revenue growth." He added that "the core CRE business should achieve >50% Ebitda margins in the medium term and sustain further margin expansion over the long term."
He also called for "the majority of the board" to be replaced. "Management compensation must also be linked far more tightly to total shareholder return to improve alignment with shareholders," the letter says.
A reconstituted board also "should immediately consider strategic alternatives for Homes.com and related RRE businesses," the letter says. "Where such alternatives do not exist, it should promptly eliminate the losses which have burdened consolidated Ebitda."
CoStar stock climbed 6.8% shortly after the open in response to the letter -- on track for its largest increase since July. The stock was the third best performer in the S&P 500, according to Dow Jones Market Data.
Write to Shaina Mishkin at shaina.mishkin@dowjones.com
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(END) Dow Jones Newswires
January 27, 2026 10:28 ET (15:28 GMT)
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