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Expresses Disappointment with the Board's Failure to Address the Company's Value Destructive Capital Spending and Longstanding UnderperformanceReiterates the Need for Improved Capital Allocation and Enhanced Board OversightAnnounces Intention to Support Shareholder-Driven Change at the 2026 Annual MeetingNEW YORK, Feb. 4, 2026 /PRNewswire/ -- The D. E. Shaw group, a global investment and technology development firm with more than $85 billion in investment capital and a history of working with companies to help build long-term value, today sent an open letter and presentation to the Board of Directors of CoStar Group, Inc. (NASDAQ:CSGP) ("CoStar" or the "Company") expressing continued disappointment with the Board's refusal to address the Company's reckless spending of shareholder capital and significant and longstanding underperformance. Investment funds managed or advised by D. E. Shaw & Co., L.P. are shareholders of CoStar and currently hold a significant economic position in the Company.The full text of the open letter to the Board follows:Board of DirectorsCoStar Group, Inc.1201 Wilson BoulevardArlington, VA 22209Re: Urgent Need for Change to Restore Shareholder Value at CoStar GroupDear Members of the Board:Over the last year, we have repeatedly expressed to you our belief that change is urgently needed at CoStar to arrest the Company's prolonged stock price underperformance, increase profitability, and position the Company for durable value creation. We were initially hopeful that the appointment of new independent directors and the formation of the Capital Allocation Committee in April 2025 would usher in a new era of more active management oversight, improved capital discipline, and a renewed focus on shareholder value.Unfortunately, we have been gravely disappointed.Under the leadership of CEO Andy Florance, CoStar has continued to dedicate disproportionate attention and resources to its unprofitable Homes.com business. This continued investment, despite repeated failures to meet projections, has eroded the Company's once-enviable margins and driven a significant decline in CoStar's stock price, despite positive momentum in the core businesses. As a consequence, today every shareholder who has purchased CoStar's stock in the last five years has lost money.CoStar's Track Record of Shareholder Value DestructionCoStar's total shareholder returns have underperformed those of the Company's self-selected proxy peers, information services peers, ISS-selected peers, and the broader market indices over the last two, three, four, five, six, seven, eight, nine, and ten years and, importantly, since both the acquisition and relaunch of Homes.com.Moreover, CoStar shareholders have endured five consecutive years of absolute stock price declines—resulting in a cumulative loss of 32%, compared to a 101% gain for the S&P 500. This is not a track record of which any board or leadership team should be proud. Yet, the Company has marshaled a defense of its performance by citing rolling five-year total shareholder returns dating back to last century. Sadly, CoStar's purported "track record of stockholder value creation" is, at best, an artifact of history, if not a convenient fiction.Notwithstanding CoStar's significant and prolonged underperformance, our private interactions with the Company and its public commentary suggest there is little willingness among the Board and executive leadership to consider alternative approaches to strategy and capital allocation. To the contrary, the Company's recent full-throated defense of its objectively poor shareholder returns demonstrates that this Board and leadership team are incapable of accepting constructive investor feedback and are adamantly opposed to reform.Value Destruction Stems From Misguided Homes.com StrategyThe root cause of the long-standing underperformance in the Company's shares stems directly from the Board's decision to repeatedly greenlight the use of the steady, predictable, and growing earnings of the core business to build and subsidize the Company's high-risk, money-losing Homes.com business. By the end of this year, CoStar will have spent more than $3 billion on Homes.com and diverted the majority of core business earnings over the last four years to fund this venture.Despite this significant and, for CoStar, unprecedented level of investment, Homes.com has generated just $80 million in annual revenue and over $2 billion of cumulative losses, a far cry from the $700 million to $1 billion in revenue and substantial profits that CoStar had projected its investment would generate by 2027, and far less than what is required to generate an acceptable return on investment within a reasonable time frame.Moreover, the Company's decision to divert resources, including its salesforce and management attention, from the core business to Homes.com directly contributed to the slowdown in sales growth CoStar experienced during 2024 and 2025. Notwithstanding the Company's recent efforts to reallocate its salesforce back to the ...Full story available on Benzinga.com
