Headquarters in Arlington, Virginia
CoStar Group, Inc.
A company specializing in information, analytics and marketing services to the commercial property industry in North America and Europe.
Key Points
With investors overly focused on AI stocks they could be overlooking high-quality businesses like CoStar Group (CSGP). The stock has been punished on fears that AI models could completely distribute their business. This could be a throw the baby out with the bath water situation.
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The stock has fallen sharply. Shares are down about 55% year-to-date and 69% from their 2025 high because investors fear AI disruption and question CoStar's heavy spending on residential real estate platforms like Homes.com and Apartments.com.
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CoStar has a strong competitive moat. Its commercial real estate platform is built on a proprietary database collected and verified over 40 years, making it difficult for competitors or AI to replicate. The business has:
- 317,000 subscribers
- 92% customer renewal rate
- 15 consecutive years of double-digit revenue growth
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Fundamentals remain strong. Despite the stock decline:
- Adjusted EBITDA grew 83% last year.
- Free cash flow turned positive.
- Analysts expect strong earnings growth through 2028.
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AI may actually strengthen CoStar. AI becomes more valuable when paired with proprietary data, which CoStar owns. The company's AI-powered search helped Homes.com traffic increase 119%.
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Management is confident. Founder and CEO Andrew Florance expects residential operations to reach breakeven by year-end and has personally purchased $5 million of CoStar stock in the open market.
Are you brave enough to catch the falling knife? As I free up cash from other investments I will probably consider dollar cost averaging into this company. I like the ability to build a position overtime and hold for many years.
To your success,
Thomas Moore
Disclosure: The author has no plans to own CSGP within 72 hours. The author wrote this article themselves, and it expresses their own opinions. The author is not receiving compensation for it. The author has no business relationship with any company whose stock is mentioned in this article.
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