Duolingo (NASDAQ:DUOL) Stock Price Down 16.5% – Time to Sell?

Duolingo, Inc. (NASDAQ:DUOL)’s stock price traded down 16.5% during trading on Thursday . The company traded as low as $117.60 and last traded at $113.0260. Approximately 523,162 shares were traded during trading, a decline of 74% from the average daily volume of 2,026,192 shares. The stock had previously closed at $135.32.

Key Stories Impacting Duolingo

Here are the key news stories impacting Duolingo this week:

• Positive Sentiment: Duolingo reported second-quarter revenue of approximately $298.5 million, up 18.3% year over year and ahead of analysts’ expectations. Adjusted earnings of $0.66 per share also exceeded consensus estimates near $0.60-$0.61. Duolingo stock sinks 15% as Q3 revenue forecast misses expectations
• Positive Sentiment: Daily active users increased 23% year over year, supporting management’s strategy of prioritizing engagement and long-term user expansion. Duolingo is targeting 100 million daily active users by 2028. Duolingo outlines 2026 revenue growth of approximately 16%
• Positive Sentiment: Needham reaffirmed its “buy” rating and maintained a $145 price target, implying potential upside from recent trading levels.
• Neutral Sentiment: Duolingo generated $88.3 million in operating cash flow and ended the quarter with approximately $1.2 billion in cash and cash equivalents, providing financial flexibility.
• Negative Sentiment: Third-quarter revenue guidance of about $302 million was below the roughly $303.9 million analyst consensus. Investors viewed the forecast as a sign that near-term monetization may lag user growth. Duolingo’s lower-than-expected revenue forecast overshadows quarterly beat
• Negative Sentiment: Second-quarter net income and EPS declined from the prior-year period, while operating profit grew only modestly, reinforcing concerns about slowing profitability growth.
• Negative Sentiment: Bank of America downgraded Duolingo to “underperform,” adding to investor caution around the company’s growth outlook.

Analysts Set New Price Targets

A number of equities analysts have issued reports on the company. Evercore set a $105.00 target price on Duolingo in a report on Thursday. Scotiabank set a $120.00 price objective on Duolingo in a report on Thursday. Morgan Stanley lifted their target price on Duolingo from $95.00 to $125.00 and gave the company an “equal weight” rating in a research report on Thursday, July 16th. UBS Group restated a “buy” rating and issued a $150.00 target price on shares of Duolingo in a research note on Thursday. Finally, Wells Fargo & Company raised their price target on shares of Duolingo from $81.00 to $82.00 and gave the stock an “underweight” rating in a research note on Tuesday, July 7th. Three equities research analysts have rated the stock with a Buy rating, eighteen have given a Hold rating and two have given a Sell rating to the company’s stock. According to data from MarketBeat, the company presently has a consensus rating of “Hold” and an average target price of $146.47.

Duolingo Stock Down 8.5%

The firm has a market capitalization of $5.77 billion, a P/E ratio of 14.24, a PEG ratio of 1.05 and a beta of 0.87. The firm’s 50 day moving average is $125.09 and its two-hundred day moving average is $115.19. The company has a debt-to-equity ratio of 0.07, a current ratio of 2.62 and a quick ratio of 2.62.

Duolingo (NASDAQ:DUOL) last announced its quarterly 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 net margin of 38.44% and a return on equity of 14.07%. The firm had revenue of $298.45 million during the quarter, compared to analysts’ expectations of $295.58 million. During the same quarter last year, the company posted $0.91 earnings per share. The company’s revenue for the quarter was up 18.3% compared to the same quarter last year. Research analysts predict that Duolingo, Inc. will post 2.81 EPS for the current year.

Insiders Place Their Bets

In related news, General Counsel Stephen C. Chen sold 1,977 shares of the business’s stock in a transaction that occurred 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 of the company’s stock, valued at approximately $5,999,403.27. The trade was a 3.61% decrease in their position. The transaction was disclosed in a legal filing with the Securities & Exchange Commission, which can be accessed through the SEC website. 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 1,420 shares of the firm’s stock in a transaction on Friday, May 15th. The shares were sold at an average price of $112.16, for a total value of $159,267.20. Following the sale, the insider directly owned 170,745 shares of the company’s stock, valued at $19,150,759.20. This represents a 0.82% decrease in their position. The SEC filing for this sale provides additional information. 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 over the last 90 days. 16.62% of the stock is currently owned by insiders.

Hedge Funds Weigh In On Duolingo

Several large investors have recently modified their holdings of DUOL. Baillie Gifford & Co. lifted 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 buying an additional 2,033,611 shares during the last quarter. Capital World Investors raised its holdings in Duolingo by 0.5% in the 4th quarter. Capital World Investors now owns 2,241,378 shares of the company’s stock valued at $393,362,000 after acquiring an additional 11,140 shares during the period. Bank of America Corp DE lifted its position in Duolingo by 511.2% during the first quarter. Bank of America Corp DE now owns 1,332,301 shares of the company’s stock worth $131,325,000 after acquiring an additional 1,114,315 shares during the last quarter. State of Michigan Retirement System boosted its holdings in shares of Duolingo by 112.9% during the first quarter. State of Michigan Retirement System now owns 1,193,307 shares of the company’s stock worth $117,624,000 after acquiring an additional 632,807 shares during the period. Finally, State Street Corp boosted its holdings in shares of Duolingo by 0.5% during the second quarter. State Street Corp now owns 1,164,387 shares of the company’s stock worth $477,422,000 after acquiring an additional 6,109 shares during the period. 91.59% of the stock is owned by institutional investors.

Duolingo Company Profile

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.