What Happened?
Shares of language-learning app Duolingo (NASDAQ: DUOL) jumped 3.1% in the morning session after the company announced plans to increase its investment in China, one of its fastest-growing international markets.
The educational technology company planned to expand its local team and product offerings to tap into the country's rising demand for language learning. A company executive noted that China is home to one of the world's largest populations of English learners and test-takers, making it a very important market. Duolingo, which established its first international office in Beijing after entering the market in 2018, reaffirmed its commitment. The vice-president of business stated, "We want to keep investing, we want to keep hiring people and we want to keep developing our products so we can better serve our Chinese customers.".
After the initial pop the shares cooled down to $310.87, up 3.2% from previous close.
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What Is The Market Telling Us
Duolingo’s shares are extremely volatile and have had 37 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 7 days ago when the stock gained 2.9% on the news that investors scooped up equities, shaking off the initial concerns inferred from the Fed's dot plot, with tech stocks leading the charge.
As a reminder, the Federal Reserve cut its benchmark interest rate by 25 basis points the previous day and signaled that more reductions could come before year-end and beyond. Initially when the cut was announced and Fed Chair Powell held his press conference, there was a pullback in the market as the Fed's "dot plot" revealed that only one cut was likely for 2026. This was below the three cuts that had been priced into the markets. This was the first interest rate cut of 2025, a move investors had widely anticipated. In response to the decision, stocks rose significantly, positioning major indexes like the S&P 500 and Nasdaq to open at record levels.
The Fed's decision was influenced by signs of a weakening labor market. Lower interest rates are generally seen as positive for stocks because they reduce borrowing costs for businesses and make fixed-income investments like bonds less attractive by comparison, driving capital into the equity market. While Fed Chair Powell noted the path forward has risks, the prospect of looser monetary policy has fueled optimism on Wall Street.
Duolingo is down 4.6% since the beginning of the year, and at $310.87 per share, it is trading 42.5% 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 $2,236.
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