Duolingo’s Strong Market Position and Growth Potential Drive Buy Rating

In a report released today, Ryan MacDonald from Needham reiterated a Buy rating on Duolingo (DUOL – Research Report), with a price target of $460.00.

Ryan MacDonald has given his Buy rating due to a combination of factors that highlight Duolingo’s strong market position and growth potential. The company’s recent earnings report was impressive, showcasing a significant increase in monthly active users driven by its effective viral marketing strategy. This growth was complemented by a rise in paid subscriber conversions, particularly with the adoption of the Video Call feature in the Duolingo Max tier, which has contributed to an acceleration in average revenue per user growth.
Additionally, Duolingo’s ability to maintain momentum in daily and monthly active users is supported by new language content releases and the upcoming launch of a Chess feature. The company’s success in cost optimization has led to better-than-expected adjusted EBITDA performance, and there is potential for further financial leverage as Duolingo continues to focus on AI-driven initiatives. Despite the stock trading at a premium, MacDonald remains optimistic about its prospects and recommends buying on strength.

MacDonald covers the Technology sector, focusing on stocks such as Yext, Udemy Inc, and Docebo. According to TipRanks, MacDonald has an average return of 4.1% and a 43.98% success rate on recommended stocks.