Summary

• After reaching an all-time high of $101.05 per share in October 2021, CoStar is now trading slightly above $36.00 per share, which is the equivalent of a ~65% drawdown.
• Last quarter, CSGP delivered its 59th consecutive quarter of double-digit revenue growth, which explains why the company has long been viewed as a 'compounding machine' in the investment community.
• CoStar is another reminder of the danger of overpaying for high-quality companies. The high quality of today can quickly morph into the hated status of tomorrow.
• CSGP's core commercial real estate franchise is intact and supported by a net cash balance sheet. This is likely to put a hard floor on the share price at one point.
• While there are significant doubts about the billions invested in the new Homes.com residential marketplace, I think it is still way too early to reach a definitive conclusion, with ARR up 58% year-over-year to almost $100 million.

What Happened To CoStar?

Researching CoStar (CSGP) brings me back to the fall of 2020, when I was still a young investment analyst in Toronto. Almost six years later, I now find myself studying the same company, except

Analyst’s Disclosure: I/we have a beneficial long position in the shares of CSGP either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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