The Long Investor
Airline Captain & Investment Analyst, Technical/Fundamental Analysis
Duolingo still offers the best learning experience: trying it to learn Spanish turned up nothing else as good. Rivals can be built quickly and the free version is annoying, but it works. At $104 the stock is testing its breakout level at the 50-day moving average, a decent-looking setup. x.comÂ
Duolingo probably works long term as a powerful AI wrapper with lots of net cash at a fairly low price, a genius CEO, a long-term CTO and a special brand. Its App Store free-download rank has slipped from around 35th to around 55th while rival Learna climbs, and its AI rollout was out of touch with customers and did some damage, which gives pause. x.com x.comÂ
Duolingo's user growth has accelerated even though the stock is still down, which leaves the setup not too bad. x.comÂ
Duolingo's product is a strict subset of what ChatGPT, Claude and Gemini already do better and cheaper, so its addressable market is structurally shrinking. Those models tutor any language with live conversation and accent correction for $20 a month, versus Duolingo's $7-13. That explains its 80% drawdown despite a clean quarter with revenue up 27%. Habit and gamification are the bull case, but habits break fast when the alternative is better, as Grammarly and Chegg showed. x.comÂ
Duolingo is evolving from a playful language app into an always-available personal AI tutor with 100 million daily users, backed by a fast-growing, increasingly engaged user base and dramatically falling AI costs. That case was visible four months ago when sentiment was poor and the stock was at $100; it has since risen 50%. x.comÂ
Duolingo is hard not to buy once people feel comfortable dunking on it after a 77% drop in a year. @Spybef0rey0ubuy notes the chart may be curling into a bottom but is still avoiding it, warning that stocks often look cheap right before another leg down. x.comÂ
Duolingo's foundation is in question because gamified education is as ripe for AI disruption as any software niche. The stock is down 83% from its June 2025 peak, with P/E cut from triple digits to about 10x and P/S from 30x to 4x, despite explosive revenue and consistent cash flow. Investors are pricing decelerating guidance and the AI threat, and management's claims to lead in AI are unconvincing. The last major chart support sits near $67, about 25% lower. x.comÂ
Duolingo could be a good buying opportunity because the main bear case, that active users were decelerating or declining, did not show up last quarter. Both of those user metrics grew in the most recent quarter. x.com x.comÂ
Duolingo can become the default learning app for millions because it has made learning a daily habit. Streaks, leaderboards, notifications and a strong brand keep users coming back, while math, music, chess and AI speaking features give it room to expand beyond languages. Revenue grew 27% in Q1 2026, though growth has slowed from its earlier pace. x.comÂ
Duolingo is not worth owning because its core product can be replicated by AI, and the market compresses the multiple before revenue falls once a moat is gone. It has 150 million-plus monthly active users with ingrained daily habits and is integrating AI faster than most, making it more defensible than average software, yet it is still down 80% this year. Software companies with replicable core products are being rerated lower across the board. x.comÂ
Duolingo's growth story is back. Daily active users rose 23% year over year, monthly active users 10% and revenue 18%. Margins are down, but the company is still free cash flow positive. x.comÂ
