Shares of CoStar Group slid 4.1% to $41.13 on March 24, extending a brutal stretch that has erased 45% of the stock's value over the past year. A broader market selloff triggered by collapsing Iran diplomacy talks added pressure, but CoStar's wound is largely self-inflicted: Wall Street is losing patience with the company's expensive bet on its home-search website.
• Three Billion Dollars Spent, Only $80 Million Coming Back. By the end of 2026, CoStar will have spent more than $3 billion on Homes.com, which has generated just $80 million in annual revenue and over $2 billion in cumulative losses — a staggering gap. CoStar now doesn't expect the portal to turn profitable until 2030, several years later than initially projected. That delay forces investors to keep funding losses with no near-term payoff, and when interest rates stay elevated, money promised four years from now is worth significantly less today.
• Two Heavyweight Hedge Funds Are Demanding an Exit. D.E. Shaw and Third Point are urging CoStar to divest or shut down Homes.com after years of losses and underperformance.
Third Point CEO Daniel Loeb accused management of "profligate spending" and "disastrous capital allocation."
CoStar's board has rejected the calls, maintaining support for the strategy despite investor criticism — setting up a proxy fight at this year's annual meeting.
• The Core Business Is Healthy, but Its Profits Are Being Consumed. CoStar reported full-year 2025 revenue of $3.2 billion, up 19% year-over-year.
Yet consolidated net margins collapsed to just 0.23% in late 2025 because the commercial real estate data business — CoStar's cash cow — is subsidizing the residential money pit. Management guided 2026 revenue of $3.78–$3.82 billion and net income of only $175–$215 million.
• Analysts Are Cutting Targets, Not Convictions — Yet. Goldman Sachs slashed its price target from $84 to $73 while maintaining a buy rating.
The average analyst target has dropped 13% to $76.29 , still far above today's price — but that gap reflects hope, not certainty. Zacks downgraded the stock to a "strong sell."
The math is simple: CoStar's proven data empire generates real cash, but every dollar of profit is being funneled into a home-search portal that may break even four years from now — or may never catch Zillow. Until quarterly results prove the spending cuts are working, the stock remains hostage to a promise dated 2030.