CoStar Shake-Up Sought Amid Homes.com Underperformance

Third Point urges changes at CoStar after $3B Homes.com bet yields weak returns; board and CEO pay come under investor fire.

January 28, 2026

Nina Dale

Hedge fund Third Point is demanding a shake-up of the CoStar board after underperformance.
CoStar invested $3B in its residential Homes.com platform, generating only $60M in 2024 revenue.
Third Point criticized CEO Andy Florance’s $37M pay and called for board and compensation reforms.
CoStar leadership defended its strategy and board, highlighting support from current directors.

Key Takeaways

Investor Push for CoStar Shake-Up

CoStar Group’s expansion into residential real estate is under fire from major shareholder Third Point. Bisnow reports that on Tuesday, Third Point CEO Daniel Loeb released a letter criticizing CoStar’s board and leadership, citing languishing stock performance and what he called misallocated investments in Homes.com.

Third Point, which held more than 2M CoStar shares as of June, is urging changes after CoStar stock fell 27% over five years, despite a brief uptick following the letter’s release.

Residential Bet Faces Scrutiny

CoStar acquired Homes.com for $156M in 2021 and has invested $3B in its US residential business. According to Loeb, the unit generated only $60M in revenue in 2024, with expectations of $80M the prior year. The fund is calling for strategic alternatives, including divestiture or closure of Homes.com.

Call for Board and Compensation Reform

Loeb’s letter labeled the CoStar board “feckless” and pressed for new directors and performance-linked management pay. He also accused CEO Andy Florance of benefiting from a $37M pay package despite poor results. The letter warned of plans to nominate new board members unless governance improves. This latest push follows a series of challenges facing CoStar, including mounting legal pressure tied to ongoing antitrust proceedings.

CoStar Responds and Defends Strategy

CoStar’s leadership defended its approach, citing ongoing dialogues with investors and board approval of current strategy. The company said Homes.com remains central to its vision for digital real estate platforms and claimed Third Point’s criticisms are misaligned with board consensus, which includes Third Point-nominated directors.

What’s Next

With standstill agreements with major investors now expired, Third Point plans to introduce a slate of director nominees. The outcome could reshape CoStar’s direction, with further developments expected as shareholders weigh in on the proposed CoStar shake-up in the months ahead.