Duolingo (NASDAQ:DUOL) Trading Down 4.5% - Here's What Happened

Key Points

• Duolingo shares fell 4.5% on Tuesday, trading as low as $127.15 after closing at $133.89 the prior session. Trading volume was far below normal, with about 232,742 shares changing hands versus an average of more than 2.1 million.
• Analyst sentiment remains mixed but mostly cautious. Recent notes included rating upgrades and higher price targets from firms like Morgan Stanley and Jefferies, but the broader view is still a Hold consensus with a MarketBeat target price of $167.17.
• The company’s latest earnings beat expectations. Duolingo reported $0.89 EPS on revenue of $291.97 million, topping analyst estimates and marking 26.5% year-over-year revenue growth.

Shares of Duolingo, Inc. (NASDAQ:DUOL - Get Free Report) were down 4.5% during trading on Tuesday . The stock traded as low as $127.15 and last traded at $127.82. Approximately 232,742 shares traded hands during mid-day trading, a decline of 89% from the average session volume of 2,097,780 shares. The stock had previously closed at $133.89.

Wall Street Analyst Weigh In

Several research firms recently issued reports on DUOL. Zacks Research raised shares of Duolingo from a "strong sell" rating to a "hold" rating in a research note on Tuesday, April 28th. Evercore set a $97.00 target price on Duolingo in a report on Tuesday, May 5th. DA Davidson reaffirmed a "neutral" rating and issued a $120.00 price target on shares of Duolingo in a research report on Monday, June 29th. Morgan Stanley upped their price target on Duolingo from $95.00 to $125.00 and gave the stock an "equal weight" rating in a research note on Thursday. Finally, Jefferies Financial Group increased their price objective on Duolingo from $95.00 to $125.00 and gave the company a "hold" rating in a report on Tuesday, July 14th. Two equities research analysts have rated the stock with a Buy rating, twenty have assigned a Hold rating and one has assigned a Sell rating to the company's stock. Based on data from MarketBeat, Duolingo currently has a consensus rating of "Hold" and a consensus target price of $167.17.

Duolingo Stock Performance

The company has a debt-to-equity ratio of 0.07, a quick ratio of 2.62 and a current ratio of 2.62. The stock's 50-day simple moving average is $119.52 and its two-hundred day simple moving average is $118.56. The stock has a market cap of $5.86 billion, a price-to-earnings ratio of 14.48, a price-to-earnings-growth ratio of 1.03 and a beta of 0.88.

Duolingo (NASDAQ:DUOL - Get Free Report) last posted its quarterly earnings data on Monday, May 4th. The company reported $0.89 EPS for the quarter, topping analysts' consensus estimates 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 period in the previous year, the company posted $0.72 earnings per share. The firm's revenue for the quarter was up 26.5% on a year-over-year basis. Analysts forecast that Duolingo, Inc. will post 2.8 earnings per share for the current year.

Insiders Place Their Bets

In other news, insider Robert Meese sold 1,420 shares of the stock in a transaction that occurred on Friday, May 15th. The stock was sold at an average price of $112.16, for a total value of $159,267.20. Following the completion of the sale, the insider directly owned 170,745 shares of the company's stock, valued at approximately $19,150,759.20. This represents a 0.82% decrease in their ownership of the stock. The transaction was disclosed in a legal filing with the Securities & Exchange Commission, which can be accessed through this hyperlink. 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 business's stock in a transaction on Monday, May 18th. The stock was sold at an average price of $113.61, for a total transaction of $224,606.97. Following the transaction, the general counsel directly owned 52,807 shares in the company, valued at $5,999,403.27. This trade 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. Insiders have sold a total of 9,506 shares of company stock valued at $1,073,864 in the last three months. Company insiders own 16.62% of the company's stock.

Institutional Trading of Duolingo

A number of hedge funds have recently bought and sold shares of the stock. Meiji Yasuda Asset Management Co Ltd. boosted its holdings in shares of Duolingo by 3.5% in the 2nd quarter. Meiji Yasuda Asset Management Co Ltd. now owns 940 shares of the company's stock valued at $385,000 after buying an additional 32 shares during the last quarter. Evergreen Capital Management LLC increased its holdings in Duolingo by 5.0% during the second quarter. Evergreen Capital Management LLC now owns 818 shares of the company's stock worth $335,000 after buying an additional 39 shares during the last quarter. Public Employees Retirement System of Ohio raised its position in Duolingo by 0.6% during the third quarter. Public Employees Retirement System of Ohio now owns 11,740 shares of the company's stock worth $3,778,000 after acquiring an additional 73 shares in the last quarter. Diversified Trust Co. raised its position in Duolingo by 4.5% during the fourth quarter. Diversified Trust Co. now owns 2,166 shares of the company's stock worth $380,000 after acquiring an additional 93 shares in the last quarter. Finally, Northwestern Mutual Investment Management Company LLC lifted its stake in Duolingo by 1.2% in the fourth quarter. Northwestern Mutual Investment Management Company LLC now owns 8,953 shares of the company's stock valued at $1,571,000 after acquiring an additional 105 shares during the last quarter. 91.59% of the stock is owned by 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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