What Happened?
Shares of language-learning app Duolingo (NASDAQ: DUOL) fell 2.7% in the afternoon session after the company's services were disrupted by a major Amazon Web Services (AWS) outage and investment bank UBS lowered its price target on the stock.
The widespread AWS outage impacted numerous digital services, including Snapchat, Canva, and OpenAI, after the cloud provider confirmed it was experiencing “increased error rates” at its facilities in Northern Virginia. This operational disruption coincided with a negative assessment from UBS. The bank cut its price target on Duolingo to $450 from $500, citing concerns about slowing user growth. UBS trimmed its forecasts for daily active user growth for the upcoming quarters and for the full fiscal year 2026. Adding to the pressure, reports noted increased insider selling, which raised concerns about investor confidence.
The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks. Is now the time to buy Duolingo? Access our full analysis report here.
What Is The Market Telling Us
Duolingo’s shares are extremely volatile and have had 39 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The previous big move we wrote about was 10 days ago when the stock dropped 4% on the news that President Donald Trump threatened to impose a 'massive increase of tariffs' on Chinese imports, breaking a monthslong period of calm on Wall Street. The unexpected comments sent major indices sharply lower, with the S&P 500 dropping 1.2% in what was on track to be its worst loss in over two months. The Dow Jones Industrial Average fell 372 points, while the tech-heavy Nasdaq composite slid 1.7%. Tariffs are taxes placed on imported goods, and an increase could lead to higher costs for American companies that rely on Chinese products. These costs are often passed on to consumers, which can dampen spending and corporate profits, creating uncertainty for investors and the broader economy.
Duolingo is down 3.1% since the beginning of the year, and at $315.69 per share, it is trading 41.6% below its 52-week high of $540.68 from May 2025. Investors who bought $1,000 worth of Duolingo’s shares at the IPO in July 2021 would now be looking at an investment worth $2,271.
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