Duolingo Reports Strong User Growth Amid Revenue Slowdown
Written by Emily J. Thompson, Senior Investment Analyst
Updated: Mar 05 2026
0mins
Source: stocktwits
Duolingo Inc's stock fell 5% as it crossed below the 5-day SMA, reflecting investor concerns despite positive user growth metrics.
The company reported 56.5 million daily active users in Q1 2026, a 21% year-over-year increase, showcasing the effectiveness of its user acquisition strategy. However, revenue growth has slowed to 27%, down from 38% the previous year, raising concerns about the balance between user growth and monetization. The introduction of AI-powered features has enhanced user engagement, but the deceleration in revenue growth may impact short-term stock performance.
Despite the current challenges, Duolingo's attractive valuation, with a price-to-sales ratio of 5, suggests potential for future price appreciation as the company continues to expand its user base.
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Analyst Views on DUOL
Wall Street analysts forecast DUOL stock price to rise
17 Analyst Rating
10 Buy
6 Hold
1 Sell
Moderate Buy
Current: 108.670
Low
160.00
Averages
260.36
High
330.00
Current: 108.670
Low
160.00
Averages
260.36
High
330.00
About DUOL
Duolingo, Inc. is a technology company. The Company is engaged in offering a mobile learning platform, as well as a digital English language proficiency assessment exam. It operates a freemium business model, namely, the app and the Website are accessible free of charge, although Duolingo also offers premium services for a subscription fee. Its solutions consist of the Duolingo App, Super Duolingo, Duolingo Max, Duolingo English Test: AI-Driven Language Assessment, Duolingo for Schools, and Duolingo ABC. The Duolingo App offers courses in over 40 different languages, including Spanish, English, French, German, Italian, Portuguese, Japanese and Chinese. Duolingo can also be accessed on desktop computers via a Web browser. Its subscription offering, Super Duolingo, offers learners additional features to enhance their learning experience. The Duolingo English Test is an online, on-demand, high-stakes English proficiency assessment. It also operates an animation and motion design studio.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
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- AI Technology Boost: The AI-powered Video Call feature has doubled the average spoken words per user compared to the previous year, showcasing its potential to enhance user engagement significantly, which lays a solid foundation for future revenue growth.
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- Active User Metrics: As of Q1 2026, Duolingo reported 56.5 million daily active users, a 21% increase year-over-year, with 12.5 million being paying subscribers, indicating success in user acquisition and retention strategies.
- AI Technology Utilization: The AI-powered Video Call feature launched in 2024 has more than doubled the average number of spoken words per user compared to the previous year, showcasing AI's potential to enhance user engagement significantly.
- Valuation Appeal: Duolingo's current price-to-sales ratio stands at 5, significantly lower than its average of 15.8 since going public, and its price-to-earnings ratio is 13.1, indicating that the stock is undervalued compared to the broader market, presenting a compelling buying opportunity for investors.
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- Solid Financial Performance: Despite challenges, Duolingo's recent Q1 report revealed a 27% year-over-year revenue increase to $292 million, with net income up 24% and free cash flow rising 43% to $147.8 million, indicating strong fundamentals.
- Growth Rate Slowdown: The company anticipates a revenue growth rate of just 17% for the current quarter, yet management remains confident in achieving its full-year growth target of 15-18%, suggesting ongoing long-term growth potential.
- Attractive Valuation: With a price-to-earnings ratio of 12, significantly lower than the S&P 500's 26, Duolingo's stock is viewed as an appealing investment opportunity, especially under its strategy of focusing on user base expansion, which could yield returns for patient investors.
See More
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- Centene's Advantages: Centene boasts an 18% free cash flow yield and a net cash position exceeding 5% of its market cap, making it an ideal candidate for dividends; additionally, the company surpassed expectations for adjusted earnings per share and revenue in Q1, with its stock rising 44% this year.
- BioMarin's Acquisition Impact: BioMarin, with a net cash position of 7.6% of its market cap and a 10.4% free cash flow yield, successfully made the list after completing a $4.8 billion acquisition of Amicus Therapeutics, which is expected to significantly enhance its market share in rare metabolic diseases, although it slightly lowered its 2026 non-GAAP earnings per share guidance while raising its full-year revenue guidance to $3.825 to $3.925 billion.
- Deckers Outdoor's Growth Outlook: Deckers Outdoor posted better-than-expected results for its fiscal Q1, with a free cash flow yield of 6.7%, and analysts have rated the stock as a buy, anticipating that its portfolio of category-defining brands will drive future growth, with shares gaining nearly 10% this year.
See More
Duolingo's User Growth Strategy Shows Promise
- Significant User Growth: As of Q1 2026, Duolingo reported 56.5 million daily active users, a 21% increase year-over-year, indicating that the company's user acquisition strategy is effective; while revenue growth has slowed, the expanded user base will provide more monetization opportunities in the future.
- AI Technology Boost: The AI-powered Video Call feature has doubled the average spoken words per user compared to the previous year, showcasing its potential to enhance user engagement significantly, which lays a solid foundation for future revenue growth.
- Revenue Growth Deceleration: Duolingo generated $292 million in revenue in Q1 2026, reflecting a 27% year-over-year increase, but this is a slowdown from the 38% growth seen in the same quarter of 2025, highlighting the trade-off between user acquisition and monetization that may impact stock performance in the short term.
- Attractive Valuation: Duolingo's current price-to-sales ratio stands at 5, significantly lower than its average of 15.8 since going public, and its price-to-earnings ratio is 13.1, indicating that the stock is undervalued compared to the broader market, suggesting potential for price recovery as user growth and profitability improve.
See More
Duolingo's User Growth Strategy Analysis
- User Growth Strategy: Duolingo's focus on user growth over the next few years has led to a slowdown in revenue and earnings growth, yet it is expected to yield significant long-term rewards for shareholders, reflecting the company's confidence in future market potential.
- Active User Metrics: As of Q1 2026, Duolingo reported 56.5 million daily active users, a 21% increase year-over-year, with 12.5 million being paying subscribers, indicating success in user acquisition and retention strategies.
- AI Technology Utilization: The AI-powered Video Call feature launched in 2024 has more than doubled the average number of spoken words per user compared to the previous year, showcasing AI's potential to enhance user engagement significantly.
- Valuation Appeal: Duolingo's current price-to-sales ratio stands at 5, significantly lower than its average of 15.8 since going public, and its price-to-earnings ratio is 13.1, indicating that the stock is undervalued compared to the broader market, presenting a compelling buying opportunity for investors.
See More
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- Market Challenges Intensify: The learning company's stock price on the afternoon of May 11, 2026, indicates a downward trend, reflecting market concerns about its future growth and potentially leading to decreased investor confidence.
- Financial Pressure Emerges: Due to uncertainties in the external environment, the learning company faces risks of declining profitability, which could impact its long-term financial stability and shareholder returns.
- Increased Competition: With the rise of competitors in the industry, the learning company needs to reassess its market strategy to maintain its competitive edge in the edtech sector and ensure sustained market share.
- Strategic Adjustment Necessity: To address current market challenges, the learning company may need to implement strategic adjustments, including optimizing its product line and enhancing customer service to improve user experience and satisfaction.
See More
Three Contrarian Stocks to Buy Now
- Duolingo Stock Decline: Duolingo's shares have plummeted nearly 80% over the past year, yet the company generated $1.1 billion in sales and $422 million in net income, reflecting a robust 38% margin, indicating that the market may be overly pessimistic about its prospects.
- Pfizer's Future Uncertainty: Pfizer's stock has risen 16% in the past year but has fallen about 56% since 2022, currently trading at just nine times earnings; despite facing patent cliffs, its pipeline of 96 potential drug candidates could significantly enhance its growth outlook if successful.
- Robinhood Market Challenges: Robinhood's shares are down nearly 30% this year, largely due to a weak crypto market, with a recent growth rate of 15% in the last quarter; however, its high valuation at over 40 times earnings raises expectations for future performance.
- Investment Opportunity Analysis: Despite the challenges these stocks face, their strong fundamentals, particularly Duolingo and Robinhood's popularity among young investors, may provide growth momentum, making them worth considering for investment during this downturn.
See More
Duolingo Stock Sell-Off: Analyzing the Decline
- Stock Price Plunge: Duolingo's stock has fallen to multi-year lows, down approximately 80% from its 52-week high, currently trading around $100, reflecting market concerns about its future growth prospects.
- Solid Financial Performance: Despite challenges, Duolingo's recent Q1 report revealed a 27% year-over-year revenue increase to $292 million, with net income up 24% and free cash flow rising 43% to $147.8 million, indicating strong fundamentals.
- Growth Rate Slowdown: The company anticipates a revenue growth rate of just 17% for the current quarter, yet management remains confident in achieving its full-year growth target of 15-18%, suggesting ongoing long-term growth potential.
- Attractive Valuation: With a price-to-earnings ratio of 12, significantly lower than the S&P 500's 26, Duolingo's stock is viewed as an appealing investment opportunity, especially under its strategy of focusing on user base expansion, which could yield returns for patient investors.
See More
