CoStar continues to defend Homes.com amid opposition from activist investors
The parent company of real estate portal Homes.com said the “investment phase” is over and that selling or abandoning the site would be premature.
CoStar continued to defend itself against a pair of activist investors who published scathing public letters calling on the company to abandon its invasion of the housing market through the Homes.com portal it bought five years ago.
New York City-based hedge fund DE Shaw & Co. on Wednesday released a public letter to CoStar’s board of directors regarding its “refusal to address the company’s reckless expenditure of shareholder capital and significant and prolonged underperformance.” This was the second shareholder in recent weeks to call for the replacement of a majority of the members of CoStar’s Board of Directors; investor third point made similar criticisms late last month.
And, for the second time in as many weeksCoStar issued a public response defending its position as a competitor in the residential portal market.
“Exiting Homes.com would, as DE Shaw and Third Point suggest, cause irreparable damage to our entire business and lead to certain and significant value destruction,” CoStar wrote in its Thursday response. “DE Shaw and Third Point’s attempt to prescribe a cure for divorce, sale, or amputation misdiagnoses an imagined patient and smacks of activism malpractice.”
CoStar is drastically reducing spending on Homes.com, starting with more than $300 million in cuts this year and more than $100 million annually through 2030. The cuts are being characterized as the end of the “investment phase,” during which the company has spent billions on Homes.com.
The company said it made its changes after consulting with top shareholders who own more than three-quarters of the company’s shares.
“The reality is that CoStar Group’s management team and Board of Directors have attempted to help DE Shaw understand the value creation potential for Homes.com and the fact that the company has a responsible plan to realize it,” CoStar wrote. The letter was first reported by Real estate news.
Third Point and DE Shaw both broadly criticized CoStar’s push to invest in “money-losing” Homes.com, on which CoStar will have spent more than $3 billion by the end of 2026, all while diverting resources from its core commercial business.
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