What Happened?
Shares of language-learning app Duolingo (NASDAQ: DUOL) fell 4.2% in the afternoon session after the stock continued its downtrend as investors weighed concerns over slowing user growth and the sustainability of its marketing-driven expansion. The language-learning app's stock has been under pressure with no specific company news released today. The negative sentiment appears to be a carryover from recent analyst commentary and bearish articles. Earlier in the month, on July 8, Morgan Stanley lowered its price target on the stock, citing a slowdown in U.S. daily active user growth following the company's "AI-First" initiative.
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What Is The Market Telling Us
Duolingo’s shares are extremely volatile and have had 31 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 biggest move we wrote about over the last year was 3 months ago when the stock gained 18.6% on the news that the company reported strong first-quarter 2025 results, which significantly beat analysts' sales, earnings, and EBITDA expectations. Revenue rose 38% from the same period last year, led by a 45% increase in subscription revenue as more learners opted into premium plans like Duolingo Max. The real story was the record surge in user engagement, with daily active users jumping 49% and paid subscribers rising 40% year-over-year, showing that Duolingo continued to expand its footprint while keeping users coming back. Zooming out, we think this was a solid print.
Duolingo is up 9.5% since the beginning of the year, but at $356.74 per share, it is still trading 34% 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 $2,566.
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