Background: CoStar is the American real estate data and analytics giant that made its name in commercial property. But a few years ago, it set its sights on residential real estate too. Since then, it’s gone on a multi-billion-dollar shopping spree, snapping up Homes.com in the US, OnTheMarket in the UK, and Australia’s Domain for a very tidy $3 billion.

What happened: This week, activist investor Dan Loeb, founder of hedge fund Third Point, published a letter to CoStar’s board, accusing them of 'weak oversight', 'poor capital allocation' and 'years of strategic missteps'. His main target? CoStar’s push into residential property portals.

What else: Despite owning less than 1% of the company, Loeb is demanding CoStar refocus on commercial real estate. If Loeb gets his way, CoStar could slash spending on residential, meaning Domain’s budget, growth plans and competitive firepower could all take a hit. And quietly, that could be the best news REA Group and its shareholders receive all year.

What's the key learning?

💡When you’re part of a global company, your budget is only as safe as your parent company’s performance and stability. Once Domain was acquired by CoStar, it stopped answering just to Australian customers and ASX shareholders and became part of a much bigger corporate chessboard.

💡Activist investors can reshape strategy fast, even with tiny ownership stakes. Loeb owns less than 1% of CoStar, but his push to refocus on commercial real estate could force cuts to residential bets like Domain. And this could limit Domain's ability to catch up to REA with marketing spend, AI investment or even headcount growth.

💡Given REA’s share price fell more than 10% when the Domain acquisition was first announced, there may now be some quietly relieved REA investors if Domain’s expansion firepower gets dialled back.