Investing.com -- CoStar Group (NASDAQ:CSGP) stock rose 2.7% after the company issued a response to Third Point LLC’s recent critical letter, defending its strategic initiatives and commitment to profitable growth.
The real estate marketplace provider pushed back against Third Point’s demands to abandon Homes.com, arguing that such a move would negatively impact its business and competitive positioning. CoStar emphasized that Homes.com is showing strong momentum with subscriber growth of 337% since the first quarter of 2024, and that the platform is now transitioning from its investment phase to scaling with lower capital intensity.
In its response, CoStar outlined several actions it has taken following engagement with shareholders, including adding three new independent directors, announcing a new independent Board Chair, forming a Capital Allocation Committee, and moderating investment in Homes.com. The company plans to reduce net investment in Homes.com by $300 million in 2026 and over $100 million annually thereafter, with the goal of achieving breakeven profitability by the end of 2029.
CoStar also highlighted its 2026 guidance, which projects revenue of $3.8 billion (an 18% increase over 2025) and Adjusted EBITDA of $770 million (an 83% increase), representing a 20% margin versus 13% in 2025. The company expects to reach $2.3 billion in Adjusted EBITDA with a 35% margin by 2030.
Third Point, which manages approximately $24 billion in assets, has criticized CoStar’s residential real estate strategy, claiming it has consumed roughly $5 billion over five years with minimal returns. The investment firm plans to nominate its own slate of directors after its standstill agreement with CoStar expired.
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