Tensions between CoStar Group and activist investors at The D.E. Shaw Group intensified this week — with both sides issuing public statements defending their positions and criticizing the other’s.
On Tuesday, D.E. Shaw accused the real estate data giant of mismanaging capital, eroding shareholder value and reducing transparency around its Homes.com venture.
“The segment reorganization appears designed to obscure the results of CoStar’s persistently underperforming Homes.com business, just six weeks after management made new performance commitments to shareholders for that same business,” the hedge fund wrote in an open letter to CoStar’s board, going on to call the move a “hide the ball” exercise.
CoStar responded Wednesday by calling the allegations “highly misleading” and questioned D.E. Shaw’s motivations, noting the investor holds significant stakes in direct competitors.
“If D. E. Shaw is worried about transparency, it should start with itself,” the company stated. “D.E. Shaw has never disclosed its economic exposure to CoStar Group, or even if it is a net long investor.”
CoStar offered further detail on why it believes D.E. Shaw’s campaign may be driven by conflicts of interest — highlighting the hedge fund’s investments in CoStar competitors.
“Public filings suggest D. E. Shaw owns just 0.22% of CoStar Group’s common stock, but almost 4x that value in CoStar Group competitors who would directly benefit from D. E. Shaw’s push for us to abandon Homes.com and eliminate the fastest growing residential real estate platform in the industry,” the company said.
Debate background
The dispute stems from CoStar’s heavy investment in Homes.com and whether it is creating or impeding long-term value and shareholder wealth.
D.E. Shaw estimates CoStar will have spent more than $3 billion on Homes.com by the end of 2026.
The firm also accused management of stopping the disclosure of key operating metrics — such as net new bookings for Homes.com.
“During the most recent earnings call, when analysts specifically requested segment-level net new bookings data, management declined to provide the information,” D.E. Shaw’s letter said. “Investors took notice: these puzzling moves contributed to a 9% decline in the Company’s stock price the following day — destroying nearly $2 billion of shareholder value.”
CoStar defended its reporting practices Tuesday — saying segment disclosures were realigned from geography-based to product-based segments to better reflect operational structure.
“Our new segment disclosure actually offers more transparency by providing audited revenue, EBITDA, Adjusted EBITDA and margin disclosures for both the Residential and Commercial segments in our recent 10-K, as well as continuing to provide disaggregated revenue disclosures,” the company stated. “Investors should expect similar Homes.com disclosures on our earnings calls that CoStar Group has always provided to stockholders.”
CoStar Q4, full year net income drop
During the referenced Q4 earnings call, CoStar Group CEO Andy Florance highlighted growth across the Homes.com network.
The platform logged more than 2.1 billion visits and averaged 100 million monthly unique visitors in 2025, according to Comscore, while January organic traffic rose 134% year over year.
“We feel we have achieved a good balance between SEM, SEO and direct traffic,” Florance said. “This allows us to optimize SEM for quality traffic and leads, not just pure quantity.”
Florance added that engagement improved — with session duration rising to about four minutes and 30 seconds and bounce rates falling from 63% in January 2025 to 41% in January 2026.
Lead volume increased 48% annually in January, with leads for Homes.com member agents up 187%.
Despite improved metrics for Homes.com, CoStar’s net income fell from $60 million a year ago to $47 million for Q4 2025.
For the full year, as revenue rose 19% annually to $3.25 billion, net income fell to $7 million from $139 million in 2024.
CoStar has argued that abandoning current Homes.com strategy would inflict “irreparable harm” on its platform and investors.
English (US) · 