Duolingo (NASDAQ:DUOL) Shares Gap Up - What's Next?

Key Points

• Duolingo shares opened sharply higher, rising from a prior close of $148.36 to $159.01 before trading near $156.24.
• Analyst sentiment remains cautious: the stock carries an average “Hold” rating and a $133.53 consensus price target, despite KeyCorp upgrading it to “Overweight.”
• Duolingo exceeded quarterly expectations, reporting $0.66 in EPS versus $0.60 expected and $298.45 million in revenue; sales increased 18.3% year over year.

Duolingo, Inc. (NASDAQ:DUOL - Get Free Report)'s stock price gapped up prior to trading on Tuesday . The stock had previously closed at $148.36, but opened at $159.01. Duolingo shares last traded at $156.2350, with a volume of 618,563 shares changing hands.

Wall Street Analyst Weigh In

A number of equities research analysts recently issued reports on the stock. JPMorgan Chase & Co. increased their target price on shares of Duolingo from $125.00 to $135.00 and gave the stock a "neutral" rating in a research report on Thursday, August 27th. KeyCorp raised shares of Duolingo from a "hold" rating to an "overweight" rating in a research note on Tuesday, August 18th. Scotiabank set a $120.00 price objective on shares of Duolingo in a report on Thursday, August 6th. Argus reiterated a "hold" rating and issued a $146.00 target price on shares of Duolingo in a research note on Tuesday, August 25th. Finally, Wall Street Zen raised Duolingo from a "sell" rating to a "hold" rating in a report on Sunday, August 16th. One investment analyst has rated the stock with a Strong Buy rating, eight have given a Buy rating, fifteen have assigned a Hold rating and one has given a Sell rating to the company. According to data from MarketBeat, Duolingo presently has an average rating of "Hold" and an average target price of $133.53.

Duolingo Stock Performance

The stock's 50 day simple moving average is $132.78 and its two-hundred day simple moving average is $115.59. The company has a market capitalization of $7.35 billion, a P/E ratio of 18.61, a P/E/G ratio of 1.20 and a beta of 0.87. The company has a debt-to-equity ratio of 0.06, a current ratio of 2.72 and a quick ratio of 2.72.

Duolingo (NASDAQ:DUOL - Get Free Report) last released its quarterly earnings results on Wednesday, August 5th. The company reported $0.66 EPS for the quarter, beating the consensus estimate of $0.60 by $0.06. The business had revenue of $298.45 million for the quarter, compared to analysts' expectations of $295.58 million. Duolingo had a net margin of 35.88% and a return on equity of 12.10%. Duolingo's revenue was up 18.3% compared to the same quarter last year. During the same period in the prior year, the firm earned $0.91 earnings per share. As a group, research analysts expect that Duolingo, Inc. will post 2.62 earnings per share for the current year.

Insider Activity

In other news, insider Natalie Glance sold 1,539 shares of the company's stock in a transaction on Tuesday, August 18th. The stock was sold at an average price of $137.80, for a total transaction of $212,074.20. Following the transaction, the insider owned 169,111 shares of the company's stock, valued at $23,303,495.80. This represents a 0.90% decrease in their ownership of the stock. The sale was disclosed in a legal filing with the SEC, which is available through 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, insider Robert Meese sold 1,354 shares of Duolingo stock in a transaction dated Monday, August 17th. The stock was sold at an average price of $129.13, for a total value of $174,842.02. Following the completion of the sale, the insider owned 169,391 shares of the company's stock, valued at approximately $21,873,459.83. The trade was a 0.79% decrease in their ownership of the stock. The disclosure for this sale is available in the SEC filing. The sale was made to cover tax withholding obligations related to the vesting of equity awards. In the last ninety days, insiders sold 6,668 shares of company stock valued at $874,382. Company insiders own 16.62% of the company's stock.

Institutional Trading of Duolingo

Several institutional investors and hedge funds have recently added to or reduced their stakes in DUOL. NewEdge Advisors LLC grew 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 during the period. Goldman Sachs Group Inc. grew its holdings in Duolingo by 123.9% during the 1st quarter. Goldman Sachs Group Inc. now owns 87,556 shares of the company's stock worth $27,190,000 after acquiring an additional 48,451 shares during the period. Focus Partners Wealth raised its position in shares of Duolingo by 28.3% during the 1st 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 raised its position in shares of Duolingo by 142.1% during the 2nd quarter. Amundi now owns 26,075 shares of the company's stock valued at $10,352,000 after acquiring an additional 15,306 shares during the last quarter. Finally, Gabelli Funds LLC acquired a new position in shares of Duolingo in the 2nd quarter valued at $205,000. 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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