CoStar Hits Back At Activist Investor As Homes.com Fight Escalates

CoStar Group has issued a sharply worded response to yesterday's open letter from activist investor Third Point, pushing back against what it calls a “completely detached from reality” portrayal of its strategy, governance and capital allocation, and signalling that the dispute is moving into a more public and combative phase.

The press release, published on January 28th, doubles down on CoStar’s residential ambitions while accusing the activist hedge fund of mischaracterising both the process and the outcomes of recent board-level decisions. It follows Third Point’s blistering critique of what it labelled CoStar’s “quixotic” and value-destructive push into residential real estate via Homes.com.

CoStar’s board and management frame the response as a defence of decisions already endorsed by governance structures that Third Point itself helped to shape. The company stresses that its recent strategic reset, including a material slowdown in Homes.com investment, was “unanimously approved by the Board and Capital Allocation Committee including members nominated by Third Point and D.E. Shaw”.

In one of the release’s more incendiary passages, CoStar accuses Third Point of sour grapes, writing:

“Unhappy with the conclusions of the independent Board they helped pick, Third Point, like a child with a board game, wants to throw the pieces off the board.”

The company rejects the hedge fund’s call to abandon or divest Homes.com, arguing that its push into residential real estate is foundational to its broader platform 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,” CoStar said.

Management positions Homes.com as a strategic linchpin alongside Apartments.com, Domain, OnTheMarket and Land.com, claiming that without it CoStar would “lose a critical partner for Apartments.com and key component of our digital ecosystem”. The group puts its expanded global addressable market at more than $100 billion.

On the numbers, CoStar reiterates guidance issued earlier this month. Net investment in Homes.com is set to fall by $300 million in 2026, with a further $100 million or more of annual reductions thereafter, targeting breakeven profitability exiting 2029. The company again points to a claimed 337% increase in Homes.com subscribers since Q1 2024 as evidence that the platform is through its heaviest investment phase.

The release also highlights the acceleration of a $500 million share buyback initiated in 2025, alongside a newly authorised $1.5 billion repurchase programme approved this month.

Financially, the company guides to 2026 revenue of $3.8 billion, up 18% year on year, and adjusted EBITDA of $770 million, an 83% increase versus 2025, implying a 20% margin. Longer term, it reiterates a target of $2.3 billion of adjusted EBITDA and a 35% margin by 2030.

CoStar also takes a swipe at its critic's own record, telling investors to “carefully consider the source of their advice”, adding that Third Point has “consistently underperformed relative to the Russell 3000 in nine out of the last ten years”.

The tone is a marked contrast to the more measured two-paragraph response issued the day before, and suggests CoStar is preparing to defend its residential strategy robustly should Third Point escalate towards a proxy contest.