CoStar Group (CSGP) is poised to exit the Nasdaq-100 index before Monday's market open, a move that could trigger significant portfolio adjustments by index-tracking funds. The real estate data and marketplace firm closed Friday at $32.68, up 2.6% from Thursday's $31.85, on trading volume more than four times the week's average through Thursday, according to LSEG data.
The Nasdaq-100, which tracks 100 of the largest non-financial companies listed on the Nasdaq, will replace CoStar with Lumentum Holdings (LITE). The index serves as the benchmark for over 200 financial products with more than $600 billion in assets under management, meaning funds that mirror the index may need to rebalance their holdings in response to the change.
CoStar's late-week rally was not enough to erase its earlier losses for the week. The stock closed at $32.92 on Monday, $33.05 on Tuesday, $31.97 on Wednesday, and $31.85 on Thursday. Despite Friday's gain, shares remain well below their 52-week high of $97.43, and the S&P 500 fell 1.24% while the Dow dropped 1.07% on Friday, according to MarketWatch.
The company's first-quarter results paint a mixed picture. CoStar reported revenue of $897 million, a 23% increase year over year, with adjusted EBITDA of $132 million. CEO Andy Florance highlighted "strong momentum" in Homes.com members, while CFO Christian Lown pointed to "strong revenue and Adjusted EBITDA growth." The company maintained its 2026 revenue forecast of $3.78 billion to $3.82 billion and raised its full-year adjusted EBITDA guidance to a range of $780 million to $820 million, as reported by Business Wire.
However, the residential segment continues to weigh on the stock. CoStar's quarterly filing showed Residential Real Estate revenue rose 32% to $425 million in the first quarter, but the segment posted an adjusted EBITDA loss of $29 million. In contrast, Commercial Real Estate generated adjusted EBITDA of $161 million. The push into residential, particularly through Homes.com, pits CoStar against Zillow (ZG) and other online real estate portals. Reuters reported last year that CoStar, which also owns Apartments.com, filed a lawsuit against Zillow over real estate photos.
Looking ahead, CoStar has an opportunity to showcase its core data business this week. In a May 15 retail market note, the firm noted that U.S. retail availability remains about 15% below its 10-year average. Brandon Svec, national director of retail analytics, said "new supply remains very thin." Svec is scheduled to present Tuesday at the ICSC Las Vegas conference.
The heavy trading on Friday may have been driven more by index repositioning than by investor sentiment about the company itself. If passive outflows materialize at Monday's open, or if concerns about Homes.com's cash burn persist, the stock could face headwinds, even with improving commercial property fundamentals in the background.
