Third Point Walks Away From CoStar Group: What’s Next?

Third Point LLC, the $24 billion hedge fund, terminated its investment position in CoStar Group on April 10, 2026, marking the end of a high-profile activist campaign that began with public criticism of management but never escalated to a formal proxy fight. In a letter to investors, Daniel Loeb's fund stated it "no longer believes that our original thesis holds true today," citing CEO Andy Florance's continued investment in Homes.com, CoStar's residential real estate marketplace, as the primary point of contention. The fund had initially signaled plans to nominate directors in January 2026 but withdrew before the nomination deadline after watching CoStar's stock decline from approximately $66 to $36.48.

The timing of Third Point's departure underscores a fundamental strategic disagreement about CoStar's corporate direction. Third Point had publicly demanded that management either divest or shut down Homes.com entirely, characterizing the platform as a "reckless drain" on operating income. The residential marketplace, which competes directly against Zillow, represents a significant capital allocation decision for CoStar's leadership. Rather than pursue a protracted board battle, Third Point chose to exit the position entirely, signaling either a loss of conviction in its activist thesis or an assessment that the probability of board change was insufficient to justify continued investment.

CoStar's fundamental business performance, however, contradicts the stock's current valuation pressure. The company reported Q4 2025 revenue of $900 million, up 27% year-over-year, extending a remarkable streak of 59 consecutive quarters of double-digit revenue growth. This growth trajectory is driven by CoStar's dominant position as a provider of commercial real estate data and analytics, supplemented by its ownership of Apartments.com and the newer Homes.com platform. Management defended its strategic direction on the earnings call, indicating that Homes.com has moved beyond its most capital-intensive phase.

The current market disconnect is stark: CoStar is trading near its 52-week low of $35.77, yet 15 of 20 analysts maintain buy or outperform ratings with a mean price target of $64.90—representing 78% upside from current levels. Street high targets reach $100, while TIKR's December 2030 valuation model target stands at $91.20. This gap between analyst consensus and market pricing, combined with CoStar's demonstrated revenue growth and the exit of a prominent activist investor, presents institutional investors with a material valuation decision: whether the market has correctly priced in structural risks to Homes.com's business model or whether analyst targets reflect attractive opportunity at current levels.