CoStar Group shares jump 5.56% premarket as activist Third Point initiates proxy battle to overhaul board and exit RRE operations.

CoStar Group surged 5.56% in premarket trading following a public letter from activist investor Third Point, which accused CoStar’s leadership of poor capital allocation, weak governance, and a failed residential real estate (RRE) strategy. Third Point, led by Daniel Loeb, announced plans to nominate directors to CoStar’s board and push for strategic overhauls, including exiting the RRE segment and refocusing on its high-margin commercial real estate (CRE) business. The firm criticized CEO Andy Florance’s $37 million 2024 compensation package despite the stock’s 27% five-year underperformance versus the S&P 500. The letter signaled a proxy battle, with Third Point arguing that divesting RRE losses and improving CRE operations could unlock significant shareholder value. The premarket rally reflected investor optimism about potential governance reforms and operational refocusing, aligning with prior market reactions to similar activist campaigns.