What Happened?
Shares of real estate data provider CoStar Group (NASDAQ:CSGP) jumped 6.7% in the afternoon session after the company unveiled a new artificial intelligence tool, Homes AI, for its Homes.com real estate platform.
The feature, built on Microsoft Azure AI models, allowed consumers to search for listings using natural, conversational language through voice or text. CoStar described the new tool as the "most significant product advancement in Homes.com's history." The company stated the goal was to make the interactive experience feel less like using a website and more like being guided by a deeply knowledgeable real estate advisor.
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What Is The Market Telling Us
CoStar’s shares are somewhat volatile and have had 10 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The biggest move we wrote about over the last year was 4 months ago when the stock dropped 18.2% on the news that the company reported third-quarter results and provided a mixed forecast for the upcoming quarter.
Revenue grew a robust 20.4% year-over-year to $833.6 million, and adjusted earnings per share of $0.23 also surpassed Wall Street's expectations. However, investors focused on the company's outlook. While CoStar's fourth-quarter revenue guidance was strong and ahead of estimates, its adjusted earnings per share forecast of $0.27 came in below the analyst consensus of $0.30. Adding to concerns, the company's operating margin fell to negative 6.1% from positive 3.4% a year ago, signaling that expenses are growing faster than sales. The sharp stock decline suggests the market is prioritizing future profitability over current revenue growth.
CoStar is down 25.3% since the beginning of the year, and at $49.04 per share, it is trading 49.4% below its 52-week high of $96.83 from August 2025. Investors who bought $1,000 worth of CoStar’s shares 5 years ago would now be looking at an investment worth $533.15.
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