What happened?
Shares of real estate data provider CoStar Group (NASDAQ: CSGP) fell 13.3% in the afternoon session after the company reported record third-quarter profitability and agreed to acquire Vexcel for $730 million, while management said inside-sales attrition left net new bookings short of its expectations. According to a company press release, CoStar reported third-quarter 2026 revenue of $952 million, up 14%, net income of $74 million, and adjusted EBITDA of $229 million, double the prior-year quarter. Net new bookings were $37 million.
The company raised full-year 2026 adjusted EBITDA guidance to $820 million to $840 million, revenue guidance to $3.75 billion to $3.77 billion, and adjusted earnings per share guidance to $1.38 to $1.41.
Chief Executive Officer Andy Florance said cost savings this year are now expected to be about $150 million versus original guidance, with at least another $200 million identified for the next 12 to 18 months, and that the company remains on track for a 2028 adjusted EBITDA target of $1.25 billion.
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What is the market telling us
CoStar’s shares are very volatile and have had 21 moves greater than 5% over the last year. But moves this big are rare even for CoStar and indicate this news significantly impacted the market’s perception of the business.
The previous big move we wrote about was 30 days ago when the stock dropped 3.8% on the news that the company’s Commercial Repeat Sale Indices showed commercial property deliveries are projected to drop sharply from the last cycle peak, alongside softer demand signals. According to CoStar’s press release, with data through August 2026, quarterly deliveries ending September 2026 are projected to fall 63% versus the fourth-quarter 2023 cycle peak. Deliveries across office, retail, and industrial are projected at 482 million square feet in the 12 months ending September 2026, down 19.5% from the same period a year earlier.
The release also revealed third-quarter 2026 demand is projected to be slightly negative, with net absorption expected to give back 2.7 million square feet over the 12 months ending September 2026, and the value-weighted U.S. Composite Index down 1.3% in August.
Fewer completions can eventually tighten supply, but near-term the data point to a cooler construction and leasing backdrop — a read-through that can weigh on CoStar, whose growth is tied to commercial real estate activity and marketplace usage.
CoStar is down 58.4% since the beginning of the year, and at $27.31 per share, it is trading 65.1% below its 52-week high of $78.23 from October 2025. Investors who bought $1,000 worth of CoStar’s shares 5 years ago would now be looking at only $311.85.
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