Duolingo (NASDAQ: DUOL) is on a roll when it comes to user growth and revenue, yet its stock recently took a 17% plunge. Despite hitting record numbers in paid subscribers, daily active users, and revenue, investors were left disappointed after an earnings miss. So what’s behind this disconnect, and what does it mean for the future of this EdTech leader?
Record-Breaking Growth and Revenue
The numbers tell a story of success. In the fourth quarter of 2024, Duolingo delivered:
- 9.5 million paid subscribers, beating estimates of 9.26 million
- 40.5 million daily active users (DAUs), a significant increase year over year
- 116.7 million monthly active users (MAUs), showing growing global adoption
- $209.6 million in revenue, a 39% increase from the previous year
Clearly, more people than ever are using Duolingo, and the company is successfully converting free users into paying subscribers. This kind of growth is rare in the competitive online education sector, making Duolingo a top player in EdTech.
Why Is Duolingo’s Stock Dropping?
With such impressive growth, why did Duolingo’s stock drop 17% after the earnings report? The reason comes down to profitability expectations.
While revenue was strong, earnings per share (EPS) came in at $0.28, missing the expected $0.48. This miss triggered concerns about rising costs and slower-than-expected profitability, leading to a stock sell-off.
Wall Street tends to react harshly when companies miss profit estimates, even if other metrics are strong. Growth is great—but if a company isn’t turning that growth into bigger profits, investors get nervous.
What Are Analysts Saying?
Despite the stock drop, some analysts still see big potential for Duolingo.
- Piper Sandler raised its price target from $351 to $390, maintaining an “Overweight” rating.
- Raymond James noted that while subscriber growth is impressive, the stock decline suggests investors had even higher expectations for 2025.
This mixed reaction highlights a key question: Is Duolingo’s rapid expansion enough to justify its stock price, or do investors need to see more profits first?
Duolingo’s Next Moves: AI, Marketing, and Expansion
Despite investor skepticism, Duolingo is not slowing down. The company has several strategies in place to boost engagement and revenue in 2025:
- AI-Powered Learning Tools: Duolingo is investing heavily in AI to enhance its lessons, including features like AI-powered video calls for language practice.
- Creative Marketing Strategies: The company continues to run viral marketing campaigns featuring its famous owl mascot, keeping Duolingo in the spotlight.
- Projected Revenue Growth: Duolingo expects $222 million in revenue next quarter and is targeting $970.5 million for the full year, exceeding Wall Street’s expectations.
Final Thoughts: Is Duolingo Still a Strong Investment?
There’s no denying that Duolingo is dominating the language-learning space. Its user growth and revenue increases prove that demand for digital education is stronger than ever. However, its earnings miss and rising costs have raised concerns about how quickly the company can turn its success into long-term profitability.
For investors, the big question is: Will Duolingo continue to grow at this pace, or will profitability concerns hold it back? If the company can balance expansion with stronger earnings, its stock could rebound quickly. If not, investors might continue to be cautious despite its undeniable success.
For now, Duolingo remains one of the most exciting companies in EdTech, but whether it’s a buy, hold, or sell depends on your risk tolerance and belief in its long-term vision.
