CoStar (CSGP) has the kind of chart that makes investors flinch and activists lean in. The stock is down hard from its 52-week high of $97.43, recently tagged a 52-week low at $57.01 (01/12/2026), and today it’s swinging again - opening at $69.53, trading as high as $70.57, and then sliding to $66.44 before settling around $66.46.
That whippy tape is exactly why the upside is getting harder to ignore. When a business with real scale in real estate data and marketplaces pairs volatility with a fresh $1.5 billion buyback and an explicit 2026 profitability push, you get the sort of “forced focus” setup activists love. And whether or not you ever see an activist letter, the pressure tends to show up the same way: tighter capital allocation, clearer targets, and less tolerance for open-ended spending.
Thesis: CSGP is a mid-term re-rating candidate. The market has been punishing the stock for heavy investment (especially in Homes.com), but management just put real numbers behind a pivot: 2026 revenue of $3.78-$3.82B (about 18% growth) and adjusted EBITDA of $740-$800M, alongside a step-down in Homes.com investment from about $850M to under $550M annually. Layer in a large buyback and a still-elevated short interest profile, and the risk-reward favors a defined-risk long trade.
One important nuance: this is not a “cheap stock” story. It’s a “catalysts + capital return + sentiment mean reversion” trade where you respect the stop.
What CoStar is and why the market cares
CoStar Group runs online real estate marketplaces, information, and analytics across commercial and residential property. Operationally, it’s a portfolio business: CoStar’s core data and information services, multifamily exposure (think Apartments.com), LoopNet, and “Other Marketplaces” that include newer initiatives.
Why does the market care? Because CoStar’s model is built around data depth, listing liquidity, and subscription-like economics that can scale well once investment phases taper. In good markets, marketplaces throw off cash. In choppy markets, the highest-quality data platforms tend to hold customer value better than you’d expect. That’s why investors are willing to underwrite reinvestment cycles - up to a point. The activist-style “up to a point” is where we are now.
The numbers that matter right now
Start with what the market is pricing today:
| Metric | Value |
|---|---|
| Current price | $66.46 |
| Market cap | $28.17B |
| 52-week range | $57.01 - $97.43 |
| Price-to-sales | 9.13x |
| EV/Sales | 8.82x |
| EV/EBITDA | 104.9x |
| Debt-to-equity | 0.12 |
| Free cash flow | -$38.8M |
| Short interest (12/31/2025) | 16.27M shares (4.14 days to cover) |
That valuation is the whole debate. On trailing metrics, the stock looks optically extreme: a P/E north of 1,300x off $0.05 EPS. But that’s also why the activist pressure matters: if the market is going to own this name, it wants a credible bridge from “investing heavily” to “earning heavily.”
Management just laid out that bridge. The 01/07/2026 announcement included:
- $1.5B share repurchase authorization.
- 2026 revenue target: $3.78-$3.82B (about 18% growth).
- 2026 adjusted EBITDA target: $740-$800M (record level).
- Reduced Homes.com investment: from $850M to under $550M annually (through 2030 plan), with profitability targeted by 2030.
- Accelerated AI deployment as part of the product strategy.
The market’s initial reaction was telling: shares fell on the announcement. That’s usually not because the news is bad. It’s because the market is skeptical. Skepticism is exactly what creates the re-rate opportunity if execution starts to land.
Valuation framing: expensive, but not untradeable
At roughly $28B market cap and about 9x sales, CSGP is priced like a high-quality software and marketplace hybrid. The problem is that current profitability metrics are not cooperating: EV/EBITDA around 105x and FCF slightly negative.
So why take a long at all? Because the trade isn’t “multiple expansion from cheap to fair.” It’s “multiple stabilization plus improving confidence.” When a company pairs a buyback with an EBITDA target, it’s effectively saying: we think the stock is worth repurchasing and we think margins are about to inflect. If those two signals are credible, you can get upside even if the stock remains expensive on a strict value screen.
Also, CSGP’s balance sheet leverage looks manageable (debt-to-equity ~0.12), and liquidity ratios are strong (current and quick ~2.99). That matters because it reduces the “forced financing” risk during an investment cycle.
Technicals and positioning: sentiment is no longer one-way
From a trading perspective, the stock is doing something important: it’s no longer trending straight down. The RSI is 54.2 (not stretched), and the MACD setup is flagged as bullish momentum with the MACD line (-0.217) above the signal (-0.762). Meanwhile, price is hovering just above the 10-day SMA ($64.71) and 20-day SMA ($64.50), while still below the 50-day SMA ($66.02) by a hair and below the 50-day EMA ($66.94).
In plain English: it’s trying to build a base after a drawdown, and it doesn’t need heroic buying to push through near-term resistance. Today’s volume (about 11.12M) is also well above the ~6.05M 30-day average, which suggests real participation, not just drift.
Short interest is not outrageous, but it’s meaningful: about 16.27M shares short with 4.14 days to cover. If the stock starts moving on improved execution, shorts can add fuel.
Catalysts (what could move the stock in the next 45 trading days)
- Buyback execution. Authorization is nice, but actual repurchases can create a steadier bid under the stock, particularly on ugly tape days like today.
- Follow-through on the 2026 target narrative. The market doesn’t need perfection; it needs evidence that the EBITDA trajectory is real.
- Homes.com spend discipline. The shift from ~$850M to under ~$550M annually is a concrete change. Any incremental confirmation that the spend curve is bending should matter.
- AI product rollout. If AI deployment improves monetization or customer retention, it reinforces the “platform value” story that supports premium multiples.
- Positioning snapback after recent weakness. CSGP showed up among large-cap losers recently, and these “crowded disappointment” situations can rebound quickly when the news flow turns.
The trade plan
This is a long trade idea built around a base-building chart, a buyback bid, and a clearer profitability framework.
- Entry: $66.45
- Target: $74.50
- Stop loss: $61.90
Horizon: mid term (45 trading days). That window is long enough for the buyback to start mattering mechanically and for sentiment to respond to continued commentary around 2026 revenue and EBITDA targets, but short enough that you’re not pretending to underwrite the full Homes.com profitability timeline out to 2030.
How I’d manage it: If CSGP closes convincingly above the 50-day EMA area (around $66.94) and holds, it increases the odds of a run toward the low-to-mid $70s. If it loses the low $60s with momentum, I’d rather step aside than rationalize it, because expensive stocks can always get more expensive on the downside when confidence breaks.
Risks and counterarguments (what can break the setup)
- Valuation risk is real. With EV/EBITDA around 104.9x and a sky-high trailing P/E, the stock has very little room for execution disappointment. Even “good but not great” updates can get sold.
- Free cash flow is currently negative. Reported FCF is about -$38.8M. If investment outpaces expectations, the buyback may matter less than bulls hope, and the market will sniff that out quickly.
- Homes.com remains a long-duration bet. Management is talking about profitability by 2030. That’s a long time in public markets. The counterargument to the bullish trade is simple: investors may keep discounting that path and refuse to pay up until profits are visible, not promised.
- Macro sensitivity to real estate cycles. CoStar touches commercial and residential activity. If transaction volumes stay sluggish, customer budgets tighten, or the advertising environment softens, revenue growth assumptions can wobble.
- Technical whipsaw. Today’s intraday range ($66.44 to $70.57) is a reminder that sizing matters. If volatility persists, stops can get clipped even if the longer thesis is intact.
Counterargument to my thesis: the market may be right that CoStar is in a prolonged “show me” period. A buyback and targets do not automatically translate into sustained margin expansion, and the stock can stay trapped in a valuation penalty box for months if investors don’t see clean operating leverage.
Conclusion: activist-style pressure is forcing clarity, and the tape is starting to cooperate
At ~$66, CSGP is no longer priced for perfection the way it arguably was near $97, but it’s still priced for confidence. The buyback, the explicit 2026 revenue and EBITDA targets, and a clear moderation in Homes.com spending create a credible path to that confidence returning. Add in improving momentum signals and a base near the lows, and the upside case is simply harder to dismiss than it was a few months ago.
I’m constructive here with a defined-risk long. What would change my mind is straightforward: a breakdown below the low $60s that sticks (suggesting the market is rejecting the re-rate), or evidence that the spend discipline and EBITDA targets are slipping. If either of those happens, the right move is to step aside, not debate it.