Duolingo (DUOL) AI Stock Analysis

• Market Cap: $14.48B
• Dividend Yield: N/A
• Average Volume (3M): 1.80M
• Price to Earnings (P/E): 131.3
• Beta (1Y): 1.68
• Revenue Growth: 39.51%
• EPS Growth: 68.53%
• Country: US
• Employees: 830
• Sector: Technology
• Sector Strength: 83
• Industry: Software - Application
• EPS (TTM): 0.91
• Shares Outstanding: 39,694,546
• 10 Day Avg. Volume: 1,861,789
• 30 Day Avg. Volume: 1,801,483
• PEG Ratio: N/A
• Price to Book (P/B): N/A
• Price to Sales (P/S): N/A
• P/FCF Ratio: N/A
• Enterprise Value/Market Cap: 1.32
• Enterprise Value/Revenue: 21.57
• Enterprise Value/Gross Profit: 29.93
• Enterprise Value/Ebitda: 163.64
• 1Y Price Target: $479.71
• Price Target Upside: 50.89% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 19

• Rating: 71 Outperform
• Price Target: $376.00 ▲(18.27% Upside)

Duolingo's overall stock score is driven by strong financial performance and a positive earnings call, highlighting robust growth and profitability. However, technical analysis indicates bearish trends, and the high P/E ratio suggests overvaluation, which tempers the overall score.

Positive Factors

Product Development

Duolingo retains advantages driven by a much deeper expertise in gamified language learning across a wider range of languages.

User Growth

Duolingo has created a very engaging language learning app that is growing daily active users by approximately 40%, with similar bookings and revenue growth.

Valuation

Valuation may initially look expensive, but based on its long-term growth profile, shares are attractively valued.

Negative Factors

Competition

The largest threat could come from Google providing generative AI features for free to users.

Market Concerns

The underperformance stems from fears that a deceleration in engagement is a sign that the business is peaking and that AI will contract the total addressable market.

Marketing Challenges

The company is pulling back temporarily on 'edgy' social media campaigns in the U.S. and other English-speaking countries due to the negative backlash experienced recently.

Duolingo Business Overview & Revenue Model

Company Description

Duolingo, Inc. develops a language-learning website and mobile app in the United States and China. The company offers courses in 40 different languages, including Spanish, English, French, Japanese, German, Italian, Chinese, Portuguese, and others. It also provides a digital language proficiency assessment exam. The company was incorporated in 2011 and is headquartered in Pittsburgh, Pennsylvania.

How the Company Makes Money

Duolingo generates revenue through a multifaceted business model. The primary revenue stream is its subscription service, Duolingo Plus, which offers users an ad-free experience, offline access, and other premium features. Additionally, Duolingo earns money through in-app advertisements shown to free-tier users. The company also capitalizes on the Duolingo English Test, an online, convenient, and widely accepted English proficiency assessment that serves educational institutions and individuals. Moreover, partnerships with educational entities and institutions contribute to its financial growth by integrating its platform into formal learning environments. These revenue streams, along with strategic investments in technology and content expansion, drive Duolingo's financial performance.

Duolingo Financial Statement Overview

Summary

Duolingo exhibits a robust financial profile marked by strong revenue growth, improved profitability, and solid cash flow generation. The balance sheet is healthy, with manageable debt levels and a strong equity position. Overall, the company is well-positioned for sustainable growth in the competitive software application industry.

Income Statement

Duolingo shows strong revenue growth with a remarkable increase from $748.0 million in 2024 to $811.2 million in TTM 2025. Gross and net profit margins have improved significantly, indicating enhanced profitability. The EBIT and EBITDA margins reflect positive operational efficiency, showcasing the company's ability to convert revenue into earnings effectively.

Balance Sheet

The balance sheet is stable with a healthy equity ratio and relatively low debt-to-equity ratio, indicating prudent financial leverage. Return on equity has improved, reflecting increased shareholder value. The company's strong cash position further underscores its financial stability.

Cash Flow

Duolingo's cash flow statement demonstrates robust operating cash flow generation and positive free cash flow growth. The operating cash flow to net income ratio is strong, indicating efficient cash earnings. Consistent free cash flow growth supports future investments and financial flexibility.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	885.15M	748.02M	531.11M	369.50M	250.77M	161.70M
Gross Profit	637.72M	544.38M	389.00M	270.06M	181.59M	115.71M
EBITDA	116.66M	113.16M	-5.83M	-60.03M	-57.28M	-13.76M
Net Income	117.18M	88.57M	16.07M	-59.57M	-60.13M	-15.78M
Balance Sheet
Total Assets	1.54B	2.40B	1.85B	1.44B	1.28B	175.74M
Cash, Cash Equivalents and Short-Term Investments	1.10B	877.64M	747.61M	608.18M	553.92M	120.49M
Total Debt	93.84M	54.66M	25.04M	28.41M	32.46M	9.24M
Total Liabilities	565.53M	1.58B	1.20B	902.45M	767.53M	256.43M
Stockholders Equity	977.03M	824.55M	655.50M	542.08M	513.06M	-80.69M
Cash Flow
Free Cash Flow	325.95M	273.40M	139.93M	43.53M	2.96M	13.69M
Operating Cash Flow	335.92M	285.51M	153.61M	53.66M	9.17M	17.71M
Investing Cash Flow	-216.47M	-217.33M	-13.58M	-14.17M	-6.21M	-4.01M
Financing Cash Flow	-31.45M	-30.00M	2.13M	14.78M	430.47M	46.95M

Duolingo Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 317.93
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Positive
• RSI: Neutral
• STOCH: Positive

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For DUOL, the sentiment is Negative. The current price of 317.93 is below the 20-day moving average (MA) of 340.64, below the 50-day MA of 370.18, and below the 200-day MA of 374.36, indicating a bearish trend. The MACD of -13.30 indicates Positive momentum. The RSI at 40.30 is Neutral, neither overbought nor oversold. The STOCH value of 17.00 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for DUOL.

Duolingo Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
DUOL	71 Outperform	$14.48B	131.33	13.44%	―	39.51%	68.53%
SPT	62 Neutral	$885.38M	―	-32.50%	―	14.79%	27.52%
DSP	59 Neutral	$635.81M	300.60	5.20%	―	30.92%	―
FRGE	58 Neutral	$260.47M	―	-28.14%	―	14.78%	21.87%
Sector *	54 Neutral	$298.66M	3.86	-5.40%	2.71%	9.11%	-73.63%
NUKK	―	$41.02M	0.29		―	―	―
NRDY	48 Neutral	$250.83M	―	-105.81%	―	-10.85%	-15.09%

Duolingo Corporate Events

Duolingo Holds 2025 Annual Stockholders Meeting

On June 11, 2025, Duolingo, Inc. held its 2025 Annual Meeting of Stockholders, where approximately 97.64% of the company’s voting power was represented. During the meeting, three Class I directors were elected, and the appointment of Deloitte & Touche LLP as the independent registered public accounting firm was ratified. Additionally, the compensation of the company’s named executive officers was approved on an advisory basis.