Duolingo (NASDAQ:DUOL) Cut to Underperform at Bank of America

Bank of America downgraded shares of Duolingo (NASDAQ:DUOL) from a neutral rating to an underperform rating in a research note issued to investors on Tuesday morning, MarketBeat reports. The brokerage currently has $93.00 target price on the stock, down from their previous target price of $103.00.

A number of other research analysts have also weighed in on the stock. Wells Fargo & Company boosted their target price on shares of Duolingo from $81.00 to $82.00 and gave the stock an “underweight” rating in a research report on Tuesday, July 7th. Wedbush initiated coverage on Duolingo in a research report on Thursday, July 16th. They issued a “neutral” rating and a $139.00 price target on the stock. DA Davidson reiterated a “neutral” rating and issued a $120.00 price objective on shares of Duolingo in a research note on Monday, June 29th. Scotiabank reissued a “sector perform” rating and set a $130.00 price objective on shares of Duolingo in a research report on Tuesday, July 28th. Finally, JPMorgan Chase & Co. increased their target price on Duolingo from $94.00 to $125.00 and gave the company a “neutral” rating in a research note on Friday, July 17th. Three analysts have rated the stock with a Buy rating, eighteen have given a Hold rating and two have assigned a Sell rating to the company’s stock. According to data from MarketBeat, Duolingo has an average rating of “Hold” and an average price target of $148.24.

Duolingo Trading Down 9.4%

NASDAQ:DUOL opened at $122.58 on Tuesday. Duolingo has a 12 month low of $87.89 and a 12 month high of $468.00. The firm has a market cap of $5.71 billion, a price-to-earnings ratio of 14.52, a P/E/G ratio of 1.04 and a beta of 0.87. The company has a quick ratio of 2.62, a current ratio of 2.62 and a debt-to-equity ratio of 0.07. The company’s 50 day moving average is $125.37 and its 200-day moving average is $114.99.

Duolingo (NASDAQ:DUOL) last posted its quarterly earnings data on Wednesday, August 5th. The company reported $0.66 earnings per share (EPS) for the quarter, topping the consensus estimate of $0.60 by $0.06. The business had revenue of $298.45 million during the quarter, compared to the consensus estimate of $295.58 million. Duolingo had a net margin of 35.88% and a return on equity of 12.23%. Duolingo’s quarterly 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 EPS. Equities analysts anticipate that Duolingo will post 2.8 EPS for the current year.

Insiders Place Their Bets

In other Duolingo news, General Counsel Stephen C. Chen sold 1,977 shares of Duolingo 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 sale, 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 ownership of the stock. The transaction was disclosed in a document filed with the Securities & Exchange Commission, which can be accessed 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 Natalie Glance sold 3,360 shares of the company’s stock in a transaction that occurred on Monday, May 18th. The shares were sold at an average price of $113.59, for a total value of $381,662.40. Following the completion of the sale, the insider owned 173,401 shares in the company, valued at approximately $19,696,619.59. This represents a 1.90% decrease in their ownership of the stock. Additional details regarding this sale are available in the official SEC disclosure. 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 sold a total of 9,506 shares of company stock worth $1,073,864 over the last quarter. Company insiders own 16.62% of the company’s stock.

Institutional Investors Weigh In On Duolingo

Institutional investors and hedge funds have recently made changes to their positions in the company. Root Financial Partners LLC increased its position in shares of Duolingo by 194.1% during the 1st quarter. Root Financial Partners LLC now owns 250 shares of the company’s stock worth $25,000 after purchasing an additional 165 shares in the last quarter. EFG International AG acquired a new position in Duolingo in the fourth quarter valued at about $26,000. AlphaCentric Advisors LLC acquired a new position in Duolingo in the fourth quarter valued at about $33,000. Banque Cantonale Vaudoise grew its stake in Duolingo by 51.1% during the first quarter. Banque Cantonale Vaudoise now owns 340 shares of the company’s stock worth $34,000 after buying an additional 115 shares during the last quarter. Finally, FNY Investment Advisers LLC acquired a new stake in shares of Duolingo during the second quarter worth approximately $34,000. Institutional investors and hedge funds own 91.59% of the company’s stock.

Duolingo News Summary

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 of roughly $0.60-$0.61. DUOL Q2 Earnings Beat Estimates on Strong User Growth
• Positive Sentiment: User momentum remained strong, with daily active users increasing 23% year over year and paid subscribers also growing. Management said lower artificial-intelligence costs should support its profitability outlook, while it continues targeting 100 million daily active users by 2028.
• Positive Sentiment: Needham reaffirmed its “buy” rating and $145 price target, implying meaningful upside from the current trading level. Needham Reaffirms Duolingo Buy Rating
• Neutral Sentiment: Truist raised its price target from $100 to $120 but maintained a “hold” rating, signaling limited near-term upside in its view.
• Neutral Sentiment: Duolingo may discontinue its Max subscription tier as it prioritizes broader user growth. The change could simplify the product lineup but may affect monetization and average revenue per user.
• Negative Sentiment: Third-quarter revenue guidance of $302 million-$302 million came in below Wall Street’s approximately $303.9 million expectation. The forecast revived concerns that Duolingo’s growth engine is slowing, overshadowing the quarterly beat. Duolingo’s lower-than-expected revenue forecast overshadows quarterly beat
• Negative Sentiment: Although revenue rose, quarterly EPS fell from $0.91 to $0.66 year over year, while net income declined 26%, adding to pressure on the stock.
• Negative Sentiment: Bank of America downgraded Duolingo to “underperform,” reinforcing concerns about valuation and decelerating growth.

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.