CoStar Group Inc. (CSGP): Bares Capital Is Bullish on This Stock

Why It Matters

The upgraded EBITDA guidance signals CoStar’s successful transition to profitability and strengthens its competitive stance against Zillow, making it a noteworthy play for investors seeking exposure to real‑estate data and marketplace services.

Key Takeaways

• Bares Capital held 26M shares in 2016, peaked at 67M in 2018
• Stake fell under 650K by end‑2024, rose to 1.2M Q3‑2025
• Q1 2026 Adjusted EBITDA doubled to $132M, beating guidance by $17M
• Full‑year 2026 EBITDA outlook lifted to $780‑$820M
• Homes.com revenue rose 58% YoY, subscriber base now over 35,000

Pulse Analysis

CoStar Group has become a cornerstone of Bares Capital’s small‑cap value strategy, reflecting the fund’s belief in the company’s durable franchise. The hedge fund’s stake trajectory—from a 26 million‑share start in 2016 to a 67 million‑share peak two years later, followed by a disciplined reduction—illustrates a classic buy‑hold‑trim cycle. Maintaining a modest 1.2 million‑share position into 2025 signals continued confidence while allowing Bares Capital to redeploy capital elsewhere.

The latest earnings underscore CoStar’s operational momentum. Adjusted EBITDA surged to $132 million in Q1 2026, a 100% year‑over‑year increase that outpaced its own high‑end forecast by $17 million. Management responded by raising the full‑year 2026 EBITDA target to a range of $780‑$820 million, suggesting that the heavy spending phase tied to its residential expansion has tapered. Simultaneously, Homes.com, CoStar’s direct competitor to Zillow, delivered a 58% revenue jump and added 4,300 new members, pushing its subscriber count past 35,000 and reinforcing the platform’s growth narrative.

For investors, CoStar’s performance offers a blend of data‑driven insight and marketplace scalability that is rare in the fragmented real‑estate tech sector. While some analysts tout higher upside in AI‑centric stocks, CoStar’s expanding EBITDA base and strategic positioning in a market buoyed by on‑shoring and tariff‑driven demand provide a more predictable risk‑adjusted return profile. The company’s ability to monetize its extensive property data and capture market share from incumbents like Zillow could translate into sustained earnings growth, making it a compelling addition for portfolios seeking exposure to the digital transformation of real‑estate services.