CoStar Group, Inc. (CSGP): A Bull Case Theory

We came across a bullish thesis on CoStar Group, Inc. on Andvari’s Substack by Douglas Ott. In this article, we will summarize the bulls’ thesis on CSGP. CoStar Group, Inc.'s share was trading at $92.96 as of July 24^th. CSGP’s trailing and forward P/E were 357.54 and 222.22 respectively according to Yahoo Finance.

CoStar Group reported another quarter of strong performance in Q2 2025, marking its 57th consecutive quarter of double-digit revenue growth with sales up 15% year over year and all-time high net new bookings of $93 million. Adjusted EBITDA rose 108% to $85 million, and Homes.com membership surged 56% sequentially. Despite a slight dip in gross margins from the February addition of Matterport, operational restructuring is underway, including eliminating unprofitable units and expanding its salesforce.

Homes.com remains the centerpiece of CoStar’s strategy, with a dedicated and growing sales team driving subscription adoption, improved agent Net Promoter Scores rising from 4 to 38 over three quarters, and marketing investments stabilizing monthly active users. Regulatory and legal pressures on competitors create tailwinds: in the U.S., Zillow faces an antitrust lawsuit from Compass over restrictive listing practices, enabling CoStar to boost Homes.com’s profile by offering free advertising to banned listings; and in Australia, REA Group, dominant in the market, faces an antitrust investigation amid steep agent fee hikes, coinciding with CoStar’s planned acquisition of challenger portal Domain.

Additional uncertainty arises from potential leadership reshuffling within REA and U.S.-based Realtor.com, both owned by the Murdoch family, which could further benefit Domain. With Homes.com targeting an expansion of its salesforce from 230 to 750 by year-end and a stabilizing user base, CoStar appears increasingly well-positioned to challenge entrenched incumbents like Zillow and REA. Supported by operational momentum, strategic acquisitions, and heightened competitive scrutiny, CoStar’s residential portals hold growing potential to emerge as true category leaders rather than cash-intensive experiments.

Previously we covered a bullish thesis on CoStar Group, Inc. (CSGP) by Douglas Ott in February 2025, which highlighted CoStar’s aggressive expansion of Homes.com, its strong financial base, and potential for margin recovery as investments scale. The company’s stock price has appreciated about 20% since our coverage. The thesis still stands as execution remains robust. Douglas Ott shares a similar view but emphasizes regulatory tailwinds and operational gains.

CoStar Group, Inc. is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 51 hedge fund portfolios held CSGP at the end of the first quarter which was 56 in the previous quarter. While we acknowledge the potential of CSGP as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

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Disclosure: None.