Duolingo (NASDAQ:DUOL) Cut to "Sell" at Wall Street Zen

Key Points

• Wall Street Zen downgraded Duolingo from “Hold” to “Sell,” while the broader analyst consensus remains “Hold” with an average price target of $148.12.
• Duolingo beat second-quarter expectations, reporting $0.66 in EPS and $298.45 million in revenue, up 18.3% year over year; however, weaker-than-expected third-quarter guidance raised concerns about slowing growth.
• DUOL opened at $130.90, with a $6.10 billion market capitalization, while institutional investors held 91.59% of outstanding shares and insiders reported recent sales under pre-arranged plans.

Duolingo (NASDAQ:DUOL - Get Free Report) was downgraded by equities researchers at Wall Street Zen from a "hold" rating to a "sell" rating in a research note issued to investors on Saturday.

DUOL has been the subject of a number of other research reports. Morgan Stanley raised their price objective on Duolingo from $95.00 to $125.00 and gave the company an "equal weight" rating in a research note on Thursday, July 16th. Evercore set a $105.00 target price on Duolingo in a report on Thursday. Scotiabank set a $120.00 price target on shares of Duolingo in a research report on Thursday. DA Davidson boosted their price target on shares of Duolingo from $120.00 to $130.00 and gave the company a "neutral" rating in a research note on Thursday. Finally, Barclays upped their price objective on shares of Duolingo from $110.00 to $115.00 and gave the stock an "equal weight" rating in a report on Thursday. Three equities research analysts have rated the stock with a Buy rating, eighteen have assigned a Hold rating and two have issued a Sell rating to the company's stock. According to data from MarketBeat, Duolingo currently has a consensus rating of "Hold" and an average price target of $148.12.

Duolingo Price Performance

DUOL stock opened at $130.90 on Friday. The stock has a market capitalization of $6.10 billion, a PE ratio of 15.51, a price-to-earnings-growth ratio of 0.95 and a beta of 0.87. The company's 50-day moving average is $125.76 and its 200-day moving average is $115.10. The company has a debt-to-equity ratio of 0.06, a current ratio of 2.72 and a quick ratio of 2.62. Duolingo has a 1 year low of $87.89 and a 1 year high of $415.76.

Duolingo (NASDAQ:DUOL - Get Free Report) last issued its earnings results on Wednesday, August 5th. The company reported $0.66 EPS for the quarter, beating analysts' consensus estimates of $0.60 by $0.06. Duolingo had a return on equity of 12.10% and a net margin of 35.88%.The business had revenue of $298.45 million during the quarter, compared to analyst estimates of $295.58 million. During the same period in the previous year, the company posted $0.91 EPS. The firm's revenue was up 18.3% compared to the same quarter last year. Equities research analysts expect that Duolingo will post 2.76 EPS for the current fiscal year.

Insider Activity

In related news, insider Natalie Glance sold 3,360 shares of Duolingo stock in a transaction that occurred on Monday, May 18th. The stock was sold at an average price of $113.59, for a total transaction of $381,662.40. Following the transaction, the insider owned 173,401 shares of the company's stock, valued at $19,696,619.59. The trade was a 1.90% decrease in their ownership of the stock. The sale was disclosed in a filing with the Securities & Exchange Commission, which is available at this link. The transaction was executed under a pre-arranged Rule 10b5-1 trading plan. The sale was made to cover tax withholding obligations related to the vesting of equity awards. Also, General Counsel Stephen C. Chen sold 1,977 shares of the company's stock in a transaction on Monday, May 18th. The stock was sold at an average price of $113.61, for a total value of $224,606.97. Following the sale, the general counsel owned 52,807 shares of the company's stock, valued at $5,999,403.27. This trade represents a 3.61% decrease in their position. The SEC filing for this sale provides additional information. The transaction was executed under a pre-arranged Rule 10b5-1 trading plan. The sale was made to cover tax withholding obligations related to the vesting of equity awards. Insiders have sold 9,506 shares of company stock worth $1,073,864 over the last 90 days. 16.62% of the stock is currently owned by corporate insiders.

Institutional Trading of Duolingo

Several institutional investors have recently made changes to their positions in DUOL. Baillie Gifford & Co. raised its stake in shares of Duolingo by 71.9% during the 4th quarter. Baillie Gifford & Co. now owns 4,861,445 shares of the company's stock worth $853,184,000 after purchasing an additional 2,033,611 shares during the period. Lingotto Investment Management LLP grew its position in Duolingo by 34.3% during the fourth quarter. Lingotto Investment Management LLP now owns 33,563 shares of the company's stock valued at $5,890,000 after buying an additional 8,563 shares during the period. Landscape Capital Management L.L.C. bought a new position in Duolingo during the fourth quarter valued at about $3,752,000. Peregrine Capital Management LLC increased its holdings in Duolingo by 50.3% during the fourth quarter. Peregrine Capital Management LLC now owns 129,515 shares of the company's stock worth $22,730,000 after buying an additional 43,352 shares during the last quarter. Finally, Investment House LLC increased its holdings in Duolingo by 250.7% during the fourth quarter. Investment House LLC now owns 18,038 shares of the company's stock worth $3,166,000 after buying an additional 12,894 shares during the last quarter. Institutional investors own 91.59% of the company's stock.

More Duolingo News

Here are the key news stories impacting Duolingo this week:

• Positive Sentiment: Duolingo exceeded second-quarter expectations, reporting adjusted earnings of $0.66 per share versus consensus of roughly $0.60-$0.61, while revenue rose 18.3% year over year to $298.5 million, above the $295.6 million estimate. DUOL Q2 Earnings Beat Estimates on Strong User Growth
• Positive Sentiment: Daily active users increased 23% year over year, and paid subscribers continued to grow, reinforcing Duolingo’s long-term expansion strategy. Management also cited lower artificial-intelligence costs as a factor supporting profitability. Duolingo stock sinks 15% as Q3 revenue forecast misses expectations
• Positive Sentiment: Needham reaffirmed its Buy rating and set a $145 price target, while Truist raised its target to $120 from $100, indicating some analysts see value after the recent selloff. Analyst ratings and price targets
• Neutral Sentiment: Management is prioritizing engagement and user growth, targeting 100 million daily active users by 2028, but projected 2026 revenue growth of approximately 16% signals a materially slower pace than Duolingo’s historical expansion. Duolingo outlines 2026 revenue growth of approximately 16%
• Negative Sentiment: The main overhang is Duolingo’s third-quarter revenue forecast, which fell below Wall Street expectations. The guidance overshadowed the earnings and user-growth beats, prompting a sharp post-earnings selloff and raising concerns that the company’s growth engine is slowing. Duolingo posts better-than-expected sales but stock drops
• Negative Sentiment: Bank of America downgraded Duolingo to Underperform, and Truist’s Hold rating with a $120 target remains below the recent trading level, reflecting valuation and execution concerns. Bank of America downgrades Duolingo

About Duolingo

Duolingo, Inc NASDAQ: DUOL is a technology-driven education company that operates a widely used language-learning platform. Founded in 2011 by Luis von Ahn and Severin Hacker, Duolingo offers a freemium service featuring bite-sized lessons, gamified exercises and adaptive learning algorithms. The company's core product is its mobile and web application, which supports instruction in more than 40 languages, ranging from widely spoken tongues such as English and Spanish to lesser-taught options including Irish and Swahili.

In addition to its flagship language courses, Duolingo has expanded its product suite to include the Duolingo English Test, an on-demand, computer-based English proficiency exam designed for academic and professional admissions.

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