Duolingo’s Growth Potential: A ‘Triple-Double’ Strategy for Substantial Upside

Morgan Stanley analyst Nathan Feather has maintained their bullish stance on DUOL stock, giving a Buy rating on June 5.

Nathan Feather has given his Buy rating due to a combination of factors that highlight Duolingo’s potential for significant growth. The ‘Triple-Double’ strategy, which involves doubling the number of users, revenue per user, and profit margins, is central to this optimistic outlook. If Duolingo achieves these targets, it could lead to approximately $2 billion in EBITDA, which suggests a substantial upside from its current position.
Despite the stock’s 60% increase since March, Feather believes the market still underestimates Duolingo’s potential for success and the additional opportunities for growth. The company’s current valuation appears high when based on short-term profit estimates, but Feather argues that the $630 bull case valuation is more attainable than the market currently appreciates. This is supported by potential growth in user base, enhanced monetization strategies, and significant operating leverage that could improve margins.

In another report released on June 5, J.P. Morgan also reiterated a Buy rating on the stock with a $580.00 price target.

Based on the recent corporate insider activity of 104 insiders, corporate insider sentiment is negative on the stock. This means that over the past quarter there has been an increase of insiders selling their shares of DUOL in relation to earlier this year.