Duolingo (NASDAQ:DUOL) Stock Price Up 8.9% - Should You Buy?

Key Points

• Duolingo shares jumped 8.9% to about $133.18, with the company valued at approximately $6.21 billion.
• Despite better-than-expected quarterly results—including EPS of $0.89 versus $0.79 expected and 26.5% year-over-year revenue growth—analysts remain cautious. The consensus rating is “Hold”, with an average price target of $167.17.
• Institutional investors increased their holdings, while insiders sold shares primarily to cover tax obligations tied to equity awards. Hedge funds and other institutions own 91.59% of Duolingo’s stock.

Duolingo, Inc. (NASDAQ:DUOL - Get Free Report)'s stock price rose 8.9% during trading on Monday . The company traded as high as $132.18 and last traded at $133.1760. Approximately 596,148 shares traded hands during mid-day trading, a decline of 71% from the average daily volume of 2,065,217 shares. The stock had previously closed at $122.24.

Analyst Upgrades and Downgrades

DUOL has been the subject of a number of analyst reports. KeyCorp reissued a "sector weight" rating on shares of Duolingo in a research note on Thursday, June 4th. Zacks Research raised shares of Duolingo from a "strong sell" rating to a "hold" rating in a research report on Tuesday, April 28th. UBS Group reiterated a "neutral" rating on shares of Duolingo in a report on Wednesday, June 17th. Wells Fargo & Company lifted their price objective on Duolingo from $81.00 to $82.00 and gave the stock an "underweight" rating in a research report on Tuesday, July 7th. Finally, Wedbush initiated coverage on Duolingo in a research note on Thursday, July 16th. They issued a "neutral" rating and a $139.00 price objective on the stock. Two equities research analysts have rated the stock with a Buy rating, twenty have issued a Hold rating and one has issued a Sell rating to the company. According to data from MarketBeat.com, Duolingo has an average rating of "Hold" and an average target price of $167.17.

Duolingo Price Performance

The business has a 50-day moving average of $120.62 and a 200 day moving average of $116.97. The company has a current ratio of 2.62, a quick ratio of 2.62 and a debt-to-equity ratio of 0.07. The firm has a market capitalization of $6.21 billion, a P/E ratio of 15.34, a price-to-earnings-growth ratio of 0.93 and a beta of 0.88.

Duolingo (NASDAQ:DUOL - Get Free Report) last announced its quarterly earnings results on Monday, May 4th. The company reported $0.89 earnings per share (EPS) for the quarter, topping the consensus estimate of $0.79 by $0.10. Duolingo had a return on equity of 14.07% and a net margin of 38.44%.The business had revenue of $291.97 million for the quarter, compared to analyst estimates of $288.60 million. During the same quarter in the prior year, the company earned $0.72 earnings per share. The company's quarterly revenue was up 26.5% on a year-over-year basis. On average, sell-side analysts predict that Duolingo, Inc. will post 2.81 earnings per share for the current fiscal year.

Insiders Place Their Bets

In other news, insider Robert Meese sold 1,420 shares of the business's stock in a transaction dated Friday, May 15th. The shares were sold at an average price of $112.16, for a total transaction of $159,267.20. Following the completion of the sale, the insider directly owned 170,745 shares of the company's stock, valued at $19,150,759.20. The trade was a 0.82% decrease in their ownership of the stock. The transaction was disclosed in a legal filing with the SEC, which is available at this link. 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 dated Monday, May 18th. The stock was sold at an average price of $113.61, for a total transaction of $224,606.97. Following the completion of the sale, the general counsel owned 52,807 shares in the company, valued at $5,999,403.27. This represents a 3.61% decrease in their position. The disclosure for this sale is available in the SEC filing. 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. Over the last 90 days, insiders have sold 9,506 shares of company stock worth $1,073,864. Insiders own 16.62% of the company's stock.

Institutional Inflows and Outflows

Several hedge funds and other institutional investors have recently added to or reduced their stakes in DUOL. NewEdge Advisors LLC lifted its position in shares of Duolingo by 1,868.2% during the 1st quarter. NewEdge Advisors LLC now owns 433 shares of the company's stock worth $134,000 after buying an additional 411 shares in the last quarter. Goldman Sachs Group Inc. increased its position in shares of Duolingo by 123.9% during the first quarter. Goldman Sachs Group Inc. now owns 87,556 shares of the company's stock valued at $27,190,000 after acquiring an additional 48,451 shares during the last quarter. Focus Partners Wealth increased its position in shares of Duolingo by 28.3% during the first quarter. Focus Partners Wealth now owns 2,021 shares of the company's stock valued at $628,000 after acquiring an additional 446 shares during the last quarter. Amundi lifted its holdings in Duolingo by 142.1% during the second quarter. Amundi now owns 26,075 shares of the company's stock worth $10,352,000 after acquiring an additional 15,306 shares during the period. Finally, Gabelli Funds LLC purchased a new position in Duolingo in the second quarter worth $205,000. 91.59% of the stock is currently owned by hedge funds and other institutional investors.

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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