Duolingo (NASDAQ:DUOL) Trading Down 16.5% – Here’s Why

Duolingo, Inc. (NASDAQ:DUOL)’s stock price traded down 16.5% during mid-day trading on Thursday . The company traded as low as $117.60 and last traded at $113.0260. 523,162 shares were traded during trading, a decline of 74% from the average daily volume of 2,026,192 shares. The stock had previously closed at $135.32.

Duolingo News Summary

Here are the key news stories impacting Duolingo this week:

• Positive Sentiment: Duolingo exceeded second-quarter expectations, reporting adjusted earnings of $0.66 per share versus consensus of roughly $0.60-$0.61, while revenue rose 18.3% year over year to $298.5 million, above the $295.6 million estimate. DUOL Q2 Earnings Beat Estimates on Strong User Growth
• Positive Sentiment: Daily active users increased 23% year over year, and paid subscribers continued to grow, reinforcing Duolingo’s long-term expansion strategy. Management also cited lower artificial-intelligence costs as a factor supporting profitability. Duolingo stock sinks 15% as Q3 revenue forecast misses expectations
• Positive Sentiment: Needham reaffirmed its Buy rating and set a $145 price target, while Truist raised its target to $120 from $100, indicating some analysts see value after the recent selloff. Analyst ratings and price targets
• Neutral Sentiment: Management is prioritizing engagement and user growth, targeting 100 million daily active users by 2028, but projected 2026 revenue growth of approximately 16% signals a materially slower pace than Duolingo’s historical expansion. Duolingo outlines 2026 revenue growth of approximately 16%
• Negative Sentiment: The main overhang is Duolingo’s third-quarter revenue forecast, which fell below Wall Street expectations. The guidance overshadowed the earnings and user-growth beats, prompting a sharp post-earnings selloff and raising concerns that the company’s growth engine is slowing. Duolingo posts better-than-expected sales but stock drops
• Negative Sentiment: Bank of America downgraded Duolingo to Underperform, and Truist’s Hold rating with a $120 target remains below the recent trading level, reflecting valuation and execution concerns. Bank of America downgrades Duolingo

Analyst Ratings Changes

A number of equities research analysts have weighed in on DUOL shares. Evercore set a $105.00 price objective on Duolingo in a research note on Thursday. DA Davidson raised their target price on shares of Duolingo from $120.00 to $130.00 and gave the stock a “neutral” rating in a research report on Thursday. Barclays lifted their target price on shares of Duolingo from $110.00 to $115.00 and gave the company an “equal weight” rating in a report on Thursday. Needham & Company LLC reiterated a “buy” rating and issued a $145.00 price target on shares of Duolingo in a research report on Thursday. Finally, Morgan Stanley increased their price target on shares of Duolingo from $95.00 to $125.00 and gave the stock an “equal weight” rating in a research note on Thursday, July 16th. Three investment analysts have rated the stock with a Buy rating, eighteen have given a Hold rating and two have assigned a Sell rating to the stock. Based on data from MarketBeat.com, the company currently has a consensus rating of “Hold” and an average target price of $148.12.

Duolingo Trading Up 6.8%

The company has a 50 day simple moving average of $125.76 and a 200 day simple moving average of $115.10. The company has a current ratio of 2.72, a quick ratio of 2.62 and a debt-to-equity ratio of 0.06. The stock has a market capitalization of $6.10 billion, a PE ratio of 15.51, a P/E/G ratio of 0.95 and a beta of 0.87.

Duolingo (NASDAQ:DUOL) last announced its earnings results on Wednesday, August 5th. The company reported $0.66 earnings per share for the quarter, beating the consensus estimate of $0.60 by $0.06. The company had revenue of $298.45 million for the quarter, compared to the consensus estimate of $295.58 million. Duolingo had a return on equity of 12.10% and a net margin of 35.88%.The company’s revenue was up 18.3% on a year-over-year basis. During the same period last year, the business posted $0.91 EPS. Analysts predict that Duolingo, Inc. will post 2.76 earnings per share for the current fiscal year.

Insider Activity at Duolingo

In other Duolingo news, insider Natalie Glance sold 3,360 shares of the company’s stock in a transaction on Monday, May 18th. The shares were sold at an average price of $113.59, for a total transaction of $381,662.40. Following the completion of the transaction, the insider owned 173,401 shares in the company, valued at approximately $19,696,619.59. This represents a 1.90% decrease in their position. The sale was disclosed in a filing with the Securities & Exchange Commission, which can be accessed through the SEC website. The transaction was executed under a pre-arranged Rule 10b5-1 trading plan. The sale was made to cover tax withholding obligations related to the vesting of equity awards. Also, insider Robert Meese sold 1,420 shares of the firm’s stock in a transaction on Friday, May 15th. The stock was sold at an average price of $112.16, for a total transaction of $159,267.20. Following the completion of the sale, the insider owned 170,745 shares of the company’s stock, valued at $19,150,759.20. This trade represents a 0.82% decrease in their position. The disclosure for this sale is available in the SEC filing. The sale was made to cover tax withholding obligations related to the vesting of equity awards. Insiders have sold a total of 9,506 shares of company stock worth $1,073,864 in the last three months. Insiders own 16.62% of the company’s stock.

Institutional Investors Weigh In On Duolingo

Hedge funds have recently added to or reduced their stakes in the company. NewEdge Advisors LLC raised its stake in shares of Duolingo by 1,868.2% during the 1st quarter. NewEdge Advisors LLC now owns 433 shares of the company’s stock worth $134,000 after buying an additional 411 shares in the last quarter. Goldman Sachs Group Inc. grew its holdings in Duolingo by 123.9% during the first quarter. Goldman Sachs Group Inc. now owns 87,556 shares of the company’s stock worth $27,190,000 after acquiring an additional 48,451 shares during the period. Focus Partners Wealth raised its position in Duolingo by 28.3% in the first quarter. Focus Partners Wealth now owns 2,021 shares of the company’s stock worth $628,000 after acquiring an additional 446 shares in the last quarter. Amundi raised its position in Duolingo by 142.1% in the second quarter. Amundi now owns 26,075 shares of the company’s stock worth $10,352,000 after acquiring an additional 15,306 shares in the last quarter. Finally, Gabelli Funds LLC purchased a new position in Duolingo in the second quarter worth $205,000. Institutional investors and hedge funds own 91.59% of the company’s stock.

About Duolingo

Duolingo, Inc (NASDAQ:DUOL) is a technology-driven education company that operates a widely used language-learning platform. Founded in 2011 by Luis von Ahn and Severin Hacker, Duolingo offers a freemium service featuring bite-sized lessons, gamified exercises and adaptive learning algorithms. The company’s core product is its mobile and web application, which supports instruction in more than 40 languages, ranging from widely spoken tongues such as English and Spanish to lesser-taught options including Irish and Swahili.

In addition to its flagship language courses, Duolingo has expanded its product suite to include the Duolingo English Test, an on-demand, computer-based English proficiency exam designed for academic and professional admissions.