Why did CoStar Group shares fall sharply after Google's announcement?

CoStar's shares fell because Google began testing a new ad format that places homes-for-sale listings at the top of search results, posing a potential competitive threat.

What is the 'long-term risk' for real estate portals like CoStar and Zillow?

The long-term risk is that Google's direct integration of listings into search results could bypass established real estate platforms, impacting their traffic and lead generation.

How did CoStar perform financially in its last reported quarter?

CoStar reported robust revenue growth of 20.4% year-over-year, but its adjusted earnings per share forecast for the upcoming quarter fell below expectations, and its operating margin turned negative.

Home / Business and Economy / Google's Search Shift Threatens Real Estate Giants

Google's Search Shift Threatens Real Estate Giants

16 Dec

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Summary

Google tests new ad format placing listings at search top.
CoStar Group shares dropped 7.8% due to the development.
Goldman Sachs labels move a 'long-term risk' for industry.

Google's Search Shift Threatens Real Estate Giants

Real estate data provider CoStar Group experienced a significant share price drop of 7.8% following reports that Google is testing a new advertising format. This experimental feature places homes-for-sale listings directly at the apex of its search results on mobile devices in select markets.

The development has ignited investor apprehension, as Google's initiative could establish it as a direct rival to established online property portals. This competitive threat raises concerns for entities like CoStar, which owns Homes.com, and Zillow, as their core traffic and lead generation channels might be disrupted. Even with much of the traffic coming directly to real estate sites, analysts suggest this represents a "long-term risk" for the sector.

CoStar's stock ultimately closed the day 6.6% lower at $63.75 per share. The market's reaction underscores the perceived significance of Google's strategic move, which could reshape the digital real estate landscape by potentially bypassing traditional intermediaries.