CoStar Group, Inc.
Thesis
CoStar Group is positioned to benefit from the growing online auction market through its acquisition of Ten-X, which has a significant market share and superior transaction metrics compared to traditional auctions. The company’s differentiated marketplace strategy and strong historical performance suggest substantial revenue growth potential, particularly in the residential sector, which is currently under-monetized. The valuation is attractive with a target price of $165, representing a 99% upside from the current price.
Did it work?
The thesis for CoStar Group was based on the expectation of significant revenue growth from its acquisition of Ten-X and a target price of $165, indicating a 99% upside. However, the stock has declined by 63.5% over the 64 months since the pitch, which clearly contradicts the long position and suggests that the anticipated benefits from the acquisition and market growth did not materialize as expected.
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