Duolingo: Strong Monetization and Strategic Product Investment Support Buy Rating Despite Near-Term DAU Concerns

In a report released yesterday, Omar Dessouky from Bank of America Securities reiterated a Buy rating on Duolingo, with a price target of $250.00.

Omar Dessouky has given his Buy rating due to a combination of factors tied to Duolingo’s operating performance and strategic positioning. He notes that preliminary fourth-quarter results show daily active users rising about 30% year over year and total bookings coming in slightly above the top end of management’s guidance range, indicating strong monetization despite softer user additions. Dessouky interprets the modest shortfall in net new DAUs as largely anticipated by investors, particularly given management’s deliberate choice to prioritize product investment over short-term user growth, which he views as supportive of long-term value creation. He also highlights that Duolingo’s CFO transition is structured to be orderly, with the outgoing CFO remaining as an advisor, reducing execution risk around the leadership change.
At the same time, Dessouky acknowledges that the stock is likely to remain contentious near term because net DAU additions did not expand year over year and because there is risk of churn from the early-2025 user cohort. However, he argues that the market is undervaluing Duolingo’s appeal as an entertainment-focused learning platform, especially relative to typical mobile games, suggesting that future growth could exceed current expectations. In his view, clear and constructive guidance for the first quarter of 2026—particularly around reigniting DAU net-add growth—could act as a catalyst to resolve investor concerns. After updating his model for the preliminary fourth-quarter 2025 data and keeping his 2026 assumptions intact, he maintains a Buy rating and a price objective of $250, which implies substantial upside from the current share price.

In another report released yesterday, TipRanks – Anthropic also reiterated a Buy rating on the stock with a $191.00 price target.