What Happened?
Shares of language-learning app Duolingo (NASDAQ: DUOL) jumped 3.7% in the morning session after Baird initiated coverage on the stock with a 'Neutral' rating and a $280 price target. The price target implies a potential upside of about 3.3% from the stock's current level. While analyst Vikram Kesavabhotla affirmed Duolingo's effective product development and strong position in the language learning market, the 'Neutral' rating reflects competitive risks that may make investors cautious. The positive stock movement also comes as the company prepares to unveil major product updates, including new non-language offerings like Chess, Math, and Music, at its Duocon conference on September 16th. This follows a period of strong growth, with the company recently reporting a 41% increase in revenue and a 40% increase in daily active users.
After the initial pop the shares cooled down to $277.73, up 1.5% from previous close.
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What Is The Market Telling Us
Duolingo’s shares are extremely volatile and have had 36 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 6 days ago when the stock dropped 3.7% on the news that analysts at D.A. Davidson downgraded the stock's rating to 'Neutral' from 'Buy'. Alongside the downgrade, the brokerage slashed its price target on the language-learning platform's stock by 40%, moving it to $300 from $500. The firm cited concerns over decelerating active user growth, which it attributed to minimal social media marketing and increased competition from AI-first alternatives. Despite the significant cut, the new price target still represented a potential 6.1% upside from the stock's previous closing price. The downgrade reflects growing valuation concerns as the company's user expansion begins to slow down.
Duolingo is down 14.8% since the beginning of the year, and at $277.73 per share, it is trading 48.6% 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 $1,998.
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