CoStar executives signal confidence with share purchases amid Third Point battle

Investing.com -- Shares of CoStar Group Inc (NASDAQ: CSGP) rose 2.5% Wednesday following a series of significant insider purchases by its top leadership. Chief Executive Officer Andy Florance, Director Rachel Glaser, and President of Marketplaces Fred Saint all reported open-market buys this week, signaling a vote of confidence as the company navigates a turbulent period.

The buying spree follows a steep decline in the stock, which hit a 52-week low of $43.16 just yesterday. Year-to-date, CoStar shares have plummeted around 27%, a drop primarily fueled by missed earnings expectations and a contentious push into the residential real estate market via Homes.com.

The company is currently under fire from two major activist hedge funds, Third Point and D.E. Shaw, who are demanding an immediate retreat from the residential segment. The activists argue that CoStar has burned billions in a "quixotic quest" that has destroyed shareholder value and distracted from its high-margin commercial core.

"Every shareholder who has purchased CoStar’s stock in the last five years has lost money," D.E. Shaw stated in a sharply worded letter to the board on February 4. The fund estimated that the focus on Homes.com has wiped out as much as $11 billion in potential market capitalization.

Despite the assault, CEO Andy Florance has remained steadfast, framing the residential expansion as a critical evolution for the company’s long-term digital ecosystem. In response to investor concerns, the board has authorized a $1.5 billion share repurchase program and committed to cutting Homes.com spending by $300 million in 2026.

"Third Point appears intent on spinning a yarn of Board complacency and ’quixotic’ investment," CoStar responded in an official statement. Management maintains that its "proven playbook" for market dominance will eventually lead to breakeven profitability for the platform by 2030.

The recent insider buys appear designed to address criticism that management has not "held the bag" alongside regular investors. Florance’s purchase of 55,720 shares and Saint’s buy of 20,000 shares mark a rare shift in sentiment after years of net selling by company insiders.

For the full year 2026, CoStar is guiding for revenue between $3.78 billion and $3.82 billion, representing roughly 17% growth. The company also expects adjusted EBITDA to reach record levels, targeting up to $800 million as it moves into a margin expansion phase.

However, the market remains wary of the "AI victim" narrative popularized by some analysts, who fear that generative AI search tools could disrupt CoStar’s proprietary data advantage. The upcoming 2026 Annual Meeting will likely serve as a referendum on Florance’s vision for the future of the real estate industry.

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