CoStar Stock Plummets on Weak Revenue Forecast and Bookings Decline

Shares of CoStar Group (NASDAQ: CSGP) plunged more than 14% in pre-market trading after the commercial real estate data company issued a disappointing revenue outlook and reported a steep decline in new business, overshadowing an otherwise strong quarter for profitability.

Guidance Overshadows Earnings Beat

Investors looked past a second-quarter earnings beat, focusing instead on the company's weakened top-line forecast. While CoStar reported adjusted earnings of $0.32 per share, topping the analyst consensus of $0.29, its forward guidance fell significantly short of expectations.

Management guided for third-quarter revenue between $935 million and $945 million, with the midpoint falling about 2.9% below Wall Street estimates. The company also trimmed its full-year 2026 revenue forecast to a range of $3.715 billion to $3.755 billion, down from a prior projection centered near $3.8 billion, according to Investing.com.

Bookings Fall, Prompting Analyst Downgrade

Adding to investor concerns, net new bookings for the second quarter came in at $69 million, a decrease of approximately 26% from the same period last year. The company reportedly attributed the drop to deliberate strategic choices around efficiency rather than a deterioration in market conditions.

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The weak outlook prompted a swift reaction from analysts. Keefe, Bruyette & Woods downgraded CoStar's stock to Market Perform from Outperform and slashed its price target to $29 from $41.

Market Reaction

The combination of a revenue miss, a below-consensus forecast, and a sharp drop in bookings created significant selling pressure. The stock's 14.3% pre-market tumble pushed its price toward its 52-week low.

This move was company-specific, as the broader S&P 500 was trading flat. The negative report compounds recent pressure on the stock, which has followed a recent CFO departure and previous reductions in analyst price targets.