Duolingo (NASDAQ:DUOL) Downgraded by Wall Street Zen to Sell

Wall Street Zen lowered shares of Duolingo (NASDAQ:DUOL) from a hold rating to a sell rating in a research note published on Saturday morning.

Several other research analysts have also recently weighed in on the company. Needham & Company LLC reiterated a “buy” rating and set a $145.00 price objective on shares of Duolingo in a research report on Thursday. Scotiabank set a $120.00 target price on shares of Duolingo in a research report on Thursday. Truist Financial upped their price target on shares of Duolingo from $100.00 to $120.00 and gave the company a “hold” rating in a research note on Thursday. DA Davidson raised their price target on shares of Duolingo from $120.00 to $130.00 and gave the stock a “neutral” rating in a research report on Thursday. Finally, KeyCorp reiterated a “sector weight” rating on shares of Duolingo in a research note on Thursday, June 4th. One investment analyst has rated the stock with a Strong Buy rating, two have issued a Buy rating, eighteen have given a Hold rating and two have given a Sell rating to the stock. According to data from MarketBeat.com, the stock presently has an average rating of “Hold” and an average price target of $148.12.

Duolingo Trading Up 6.8%

Shares of NASDAQ:DUOL opened at $130.90 on Friday. Duolingo has a 12-month low of $87.89 and a 12-month high of $415.76. The business has a 50 day moving average of $125.76 and a 200-day moving average of $115.10. The company has a quick ratio of 2.62, a current ratio of 2.72 and a debt-to-equity ratio of 0.06. The stock has a market cap of $6.10 billion, a PE ratio of 15.51, a P/E/G ratio of 1.02 and a beta of 0.87.

Duolingo (NASDAQ:DUOL) last announced its earnings results on Wednesday, August 5th. The company reported $0.66 earnings per share for the quarter, topping analysts’ consensus estimates of $0.60 by $0.06. The company had revenue of $298.45 million for the quarter, compared to analyst estimates of $295.58 million. Duolingo had a return on equity of 12.10% and a net margin of 35.88%.The firm’s quarterly revenue was up 18.3% compared to the same quarter last year. During the same quarter last year, the company earned $0.91 earnings per share. As a group, equities research analysts forecast that Duolingo will post 2.74 earnings per share for the current year.

Insider Transactions at Duolingo

In related news, insider Natalie Glance sold 3,360 shares of the business’s stock in a transaction dated Monday, May 18th. The stock was sold at an average price of $113.59, for a total value of $381,662.40. Following the completion of the transaction, the insider owned 173,401 shares of the company’s stock, valued at $19,696,619.59. The trade was a 1.90% decrease in their ownership of the stock. The transaction was disclosed in a document filed with the Securities & Exchange Commission, 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, 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 sale, the general counsel directly owned 52,807 shares of the company’s stock, valued at $5,999,403.27. This represents a 3.61% decrease in their position. The SEC filing for this sale provides additional information. 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. In the last three months, insiders have sold 9,506 shares of company stock valued at $1,073,864. 16.62% of the stock is owned by corporate insiders.

Hedge Funds Weigh In On Duolingo

Hedge funds and other institutional investors have recently made changes to their positions in the company. Meiji Yasuda Asset Management Co Ltd. lifted its holdings in shares of Duolingo by 3.5% during the 2nd quarter. Meiji Yasuda Asset Management Co Ltd. now owns 940 shares of the company’s stock worth $385,000 after acquiring an additional 32 shares during the period. Evergreen Capital Management LLC increased its stake in Duolingo by 5.0% in the second quarter. Evergreen Capital Management LLC now owns 818 shares of the company’s stock valued at $335,000 after acquiring an additional 39 shares during the last quarter. Public Employees Retirement System of Ohio increased its stake in Duolingo by 0.6% in the third quarter. Public Employees Retirement System of Ohio now owns 11,740 shares of the company’s stock valued at $3,778,000 after acquiring an additional 73 shares during the last quarter. Northwestern Mutual Investment Management Company LLC raised its position in Duolingo by 1.2% during 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 purchasing an additional 105 shares in the last quarter. Finally, Diversify Wealth Management LLC raised its position in Duolingo by 3.7% during the fourth quarter. Diversify Wealth Management LLC now owns 3,139 shares of the company’s stock valued at $520,000 after purchasing an additional 111 shares in the last quarter. 91.59% of the stock is currently owned by institutional investors and hedge funds.

Key Headlines Impacting Duolingo

Here are the key news stories impacting Duolingo this week:

• Positive Sentiment: Duolingo exceeded second-quarter expectations, reporting adjusted earnings of $0.66 per share versus consensus of roughly $0.60-$0.61, while revenue rose 18.3% year over year to $298.5 million, above the $295.6 million estimate. DUOL Q2 Earnings Beat Estimates on Strong User Growth
• Positive Sentiment: Daily active users increased 23% year over year, and paid subscribers continued to grow, reinforcing Duolingo’s long-term expansion strategy. Management also cited lower artificial-intelligence costs as a factor supporting profitability. Duolingo stock sinks 15% as Q3 revenue forecast misses expectations
• Positive Sentiment: Needham reaffirmed its Buy rating and set a $145 price target, while Truist raised its target to $120 from $100, indicating some analysts see value after the recent selloff. Analyst ratings and price targets
• Neutral Sentiment: Management is prioritizing engagement and user growth, targeting 100 million daily active users by 2028, but projected 2026 revenue growth of approximately 16% signals a materially slower pace than Duolingo’s historical expansion. Duolingo outlines 2026 revenue growth of approximately 16%
• Negative Sentiment: The main overhang is Duolingo’s third-quarter revenue forecast, which fell below Wall Street expectations. The guidance overshadowed the earnings and user-growth beats, prompting a sharp post-earnings selloff and raising concerns that the company’s growth engine is slowing. Duolingo posts better-than-expected sales but stock drops
• Negative Sentiment: Bank of America downgraded Duolingo to Underperform, and Truist’s Hold rating with a $120 target remains below the recent trading level, reflecting valuation and execution concerns. Bank of America downgrades Duolingo

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.