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A day after a prominent hedge fund investor launched a hostile takeover bid of CoStar’s board over concerns about the real estate portal, CoStar doubled down on its Homes.com strategy.

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A day after a prominent hedge fund investor launched a bid to force CoStar to move on from its attempt to build a fourth major real estate portal, the Homes.com parent pushed back against the idea.

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Third Point founder Daniel Loeb issued a blistering public letter on Tuesday, calling CoStar’s heavy investment in residential real estate a “fiasco” and calling for a new slate of directors on the company’s board that would consider moving on from Homes.com.

But abandoning Homes.com and the company’s other residential real estate investments would be premature, CoStar responded on Wednesday, as it sought to instill confidence that its strategy would pay off.

“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 company 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.”

Much of the fight is focused on the ability of CoStar, a giant in commercial real estate that in recent years muscled its way into residential, to generate stronger returns for investors.

But at its core are questions about whether CoStar can turn Homes.com into a colossal residential real estate tool on par with Zillow, Realtor.com and Redfin.

The company has suggested that it was friendlier to real estate agents than its competitors, specifically taking aim at Zillow and creating a model that allowed consumers to more easily connect directly with listing agents.

In his letter on Tuesday, Loeb suggested that consumers were already entrenched in the other top three portals, and that easy access to listings via the other MLS syndicators meant that Homes.com lacked “meaningful differentiation.”

Loeb’s promise to nominate a slate of new directors and CoStar’s response sets up a battle over whether stockholders agree with Loeb or CoStar’s management.

After years of heavy spending on marketing to generate awareness of its Homes.com brand, CoStar announced earlier this month that it would drastically cut spending in 2026 and continue those spending cuts through 2030.

The cuts follow a $1 billion marketing spend that started in 2024, as well as the $1.6 billion acquisition of 3D scanning company Matterport, a purchase that can be applied across CoStar’s brands.

In its letter on Wednesday, CoStar positioned the spending cuts as the end of an investment period that is a standard playbook for the company. And it said that the residential real estate market is too big to ignore.

“CoStar Group has always grown by investing with long-term vision. The investment periods, whether for CoStar, Apartments.com, LoopNet, or our other platforms always took time, and we asked investors to trust that we have the expertise to make the vision a reality,” the company said. “We have never failed before in realizing the vision, and we won’t now.”

“One thing we know for certain is that abandoning Homes.com now that the investment phase is tapering would be a certain way to destroy long-term value for stockholders,” CoStar said.

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