The pressure campaign engulfing CoStar is escalating.
Hedge fund D.E. Shaw publicly called for a board shake-up and strategic reset days after Third Point launched its own broadside against the real estate data company.
In a letter released Wednesday, D.E. Shaw blamed CoStar’s prolonged stock slump on what it called a “high-risk, money-losing” investment in Homes.com, the consumer listings platform CoStar has spent billions trying to scale, the Wall Street Journal reported.
The hedge fund said leadership change may be necessary and accused the board of failing to rein in a strategy that has dragged down shareholder returns.
The move follows a fresh activist push from Third Point, which last week said it plans to nominate several directors to CoStar’s eight-person board. Third Point CEO Daniel Loeb has been especially blunt, blasting what he called a “feckless board,” criticizing CEO Andy Florance’s pay and urging CoStar to find an exit from Homes.com.
CoStar, founded by Florance in the 1980s, built its dominance in commercial real estate data, becoming essential infrastructure for brokers and investors across office, multifamily and hospitality. About five years ago, the company expanded into residential by acquiring Homes.com, taking on Zillow and Realtor.com in a costly, consumer-facing battle.
Loeb estimates CoStar has spent roughly $5 billion on Homes.com and related residential efforts, resulting in a projected 2025 revenue of just $80 million. He also cited Florance’s $37 million compensation in 2024 and noted that CoStar’s stock has fallen roughly 27 percent over the past five years, badly trailing the broader market.
D.E. Shaw echoed many of those criticisms, arguing that Florance is stuck on an “unsuccessful” Homes.com strategy. The hedge fund urged CoStar to refocus on its core commercial franchises, find clearer paths to monetization or restructure Homes.com, buy back shares and overhaul executive compensation.
While D.E. Shaw did not explicitly threaten a proxy fight, the letter left the door open.
The renewed activism comes after a fragile détente collapsed. Less than a year ago, CoStar, D.E. Shaw and Third Point struck an agreement that added three new directors, installed an independent chair and created a capital allocation committee to review Homes.com.
That agreement expired last week. Earlier this month, CoStar said it would scale back Homes.com investment to target profitability by 2030, a move Loeb dismissed as insufficient.
CoStar is pushing back forcefully. The company said its board unanimously supports the Homes.com strategy and accused Third Point of acting recklessly, later adding that D.E. Shaw had “latched on” to a misguided campaign.
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