Billionaire Dan Loeb Ends Push To Reform CoStar As Stock Slides

Third Point, billionaire Dan Loeb’s hedge fund, abandoned its activist campaign at CoStar Group and liquidated its position in the commercial real estate data firm that has been pushing deeper into the consumer space. 

The sell-off is an abrupt shift from Third Point, which launched a public campaign in January against what it called CoStar’s “feckless board of directors that has failed to protect shareholders” from CoStar CEO Andy Florance’s “quixotic quest” to expand beyond the firm's core business.

In a Friday letter to investors obtained by Reuters, Loeb said Third Point no longer felt that a shift back to focusing on the core business could salvage CoStar's financial performance. 

“We no longer believe that our original thesis ​holds true today and have disposed of our position in its entirety,” Loeb wrote.

Shares in CoStar were trading up more than 1% early Tuesday, but the real estate data giant has lost more than 40% of its value since the start of the year. Its valuation slipped below $45 per share in February for the first time since 2019 and has continued to slide since. 

A CoStar spokesperson said in a statement Tuesday morning that the firm continued to execute a plan to increase profitability that began months before Third Point publicly pushed for change. 

“CoStar Group is focused on executing our proven playbook to build on our momentum as we enter our next chapter of margin expansion and profitable growth,” the spokesperson said. “We look forward to continuing to engage with stockholders as we continue to unlock the tremendous value of our digital ecosystem.”

In its January campaign, Third Point criticized CoStar’s focus on building up Homes.com, the residential sales platform it acquired in 2021 for $156M in cash, and said the company’s “anemic performance can be ascribed entirely to the misallocation of billions of dollars into” the platform. It also equated the $37M pay package Florance received in 2024 to “an elementary school child who wins a prize even for finishing last.” 

The hedge fund didn’t disclose the size of its stake in the firm when it launched the activist campaign, but it was holding more than 2 million shares in June 2025. Loeb called for changes at the board of directors, a reorientation of CoStar’s business to focus on commercial real estate, and a pursuit of strategic alternatives that could include selling or shutting down Homes.com. 

CoStar management said in early January that it would cut its annual net investment in Homes.com by 35% to $550M, with continued cuts planned through 2030. The firm spent more than $1B on marketing alone for the website since its acquisition. 

The shift came before Third Point launched its public campaign on Jan. 27 but after an April 2025 investor letter in which Loeb highlighted expanding losses from the site’s operation and said they “obscured rapid growth in the core business,” The Real Deal reported at the time. In February, CoStar laid off roughly 200 people from the Homes.com division, TRD reported.

CoStar’s management responded a day after the January letter from Third Point with a statement outlining the moves it had made over the previous nine months to boost profitability. 

The changes included three independent new board seats, with two spots selected by Third Point and the third chosen by D.E. Shaw, another investor pushing for change at CoStar since at least April 2025.

CoStar promised to boost stock buybacks, to deploy artificial intelligence across the organization to “drive revenue growth and realize meaningful efficiencies,” and to approve an updated executive compensation package.

It defended the Homes.com investment and said the platform was demonstrating strong momentum that would eventually push it to profitability. 

“Third Point’s demand that we abandon Homes.com reflects their complete misunderstanding of our business, industry, and the strong progress we are making,” the statement said. “Third Point would have you believe that Homes.com could be jettisoned or shut down with no negative impact on our business or competitive positioning.”