Key Stats for Duolingo Stock
- Price change for Duolingo stock: -14%
- $DUOL Share Price as of Feb. 27: $101
- 52-Week High: $544
- $DUOL Stock Price Target: $245
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What Happened?
Duolingo (DUOL) stock plunged 14% on Friday after the language-learning app delivered weak guidance for 2026 despite beating fourth-quarter revenue expectations.
- Duolingo reported Q4 revenue of $282.9 million, up 35% year-over-year and beating analyst estimates of $275.9 million.
- However, investors focused on the company’s disappointing outlook for the year ahead.
- For fiscal 2026, Duolingo expects bookings growth of just 10% to 12%, well below the 24% growth it posted in Q4.
- The company also guided to an adjusted EBITDA margin of around 25%, down from 29.8% in Q4, and significantly below analyst expectations of $385 million for the full year.
CEO Luis von Ahn explained that the company is shifting its strategy to prioritize user growth over near-term profitability.
- Duolingo’s daily active user (DAU) growth decelerated throughout 2025, and the company now expects DAU growth of about 20% year-over-year throughout 2026.
- To reverse this trend, von Ahn announced an ambitious goal to reach 100 million daily active users by 2028, effectively doubling from current levels.
- To achieve this target, Duolingo plans to reduce monetization friction by making AI features more widely available.
- The company will move its popular “video call with Lily” feature from the expensive Max tier down to the cheaper Super tier, potentially reducing revenue per user in the short term.
Duolingo also plans to improve the free user experience and invest heavily in new subjects like math, music, and chess.
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What the Market Is Telling Us About Duolingo Stock
The market’s harsh reaction to Duolingo stock shows investors are skeptical about the company’s decision to sacrifice near-term profitability for long-term user growth.
Von Ahn acknowledged that the guidance “may come as a surprise to some investors” but insisted it aligns with his long-term vision to provide access to education for everyone.
New CFO Gilian Munson, who just joined this week, tried to provide perspective on the trade-off.
She said if Duolingo maintains its current path, it could reach $1.5 billion in revenue with over $400 million in adjusted EBITDA by 2028.
But if the company successfully doubles its user base and improves monetization, it could potentially reach $2.5 billion in revenue with over $700 million in EBITDA.
Duolingo also announced a $400 million share buyback authorization, signaling confidence in the long-term strategy despite the near-term headwinds.
Duolingo ended the quarter with 133.1 million monthly active users and over 50 million daily active users for the first time.
Analysts noted that while the strategic shift makes sense theoretically, execution risk is high.
The company admitted it has “overmonetized” its user base by adding too much friction, but finding alternative monetization methods without affecting user growth will take time.
For now, Duolingo stock faces an uncertain path as the company bets big on AI-driven user growth.
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Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any stocks mentioned. Thank you for reading, and happy investing!
