Investors major concern over Homes.com $2B in losses.

Homes.com. On February 4, 2026, D.E. Shaw released a letter blasting CoStar’s “reckless spending,” estimating the company will have spent over $3 billion on Homes.com by the end of 2026 while generating only roughly $80 million in annual revenue and over $2 billion in cumulative losses. Both firms are calling for CoStar to divest or shut down its residential operations to refocus on its core commercial real estate business.

Quarterly Performance: In Q1 2025, CoStar Group reported a net loss of $15 million, a decline from a $7 million profit in Q1 2024. This was primarily attributed to costs from the $1.6 billion acquisition of Matterport and ongoing marketing for Homes.com.
Revenue Growth: Despite the high investment costs, CoStar reported its 56th consecutive quarter of revenue growth in Q1 2025, with total revenue rising 12% to $732 million.
Operational Expansion: The Homes.com salesforce grew to 370 people in early 2025, with a target of 500 representatives.

In response, CoStar has robustly defended its strategy, claiming that abandoning Homes.com would cause “irreparable harm” and that the platform is essential to its digital ecosystem. To appease shareholders, the company has announced a plan to reduce its annual investment in Homes.com by $300 million in 2026 and authorized a new $1.5 billion share repurchase program.

Key Investor Demands & Concerns

Strategy Divestment: Activists want CoStar to exit the residential market (Homes.com) entirely, characterizing it as a “high-risk, money-losing” venture.
Board Overhaul: Third Point intends to nominate a new slate of directors, citing weak oversight and a “disconnect” between management compensation and shareholder returns.
Value Destruction: D.E. Shaw argues that the failed foray into residential real estate has destroyed up to $11 billion in shareholder value as the stock hit new 52-week lows in early February 2026.

CoStar’s 2026 Financial Outlook

Despite the pressure, CoStar’s management remains committed to the residential segment, highlighting strong user growth and a path to future profitability.

2026 Revenue Guidance: Projected between $3.78 billion and $3.82 billion, representing ~18% year-over-year growth.
Profitability Timeline: Management expects Homes.com to achieve breakeven by 2029 and positive Adjusted EBITDA by 2030.
Capital Return: Acceleration of a $500 million buyback program from 2025 and a new $1.5 billion authorization approved in January 2026.

Peace be with you

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