Duolingo (DUOL) has seen its stock plummet 83% from its peak, sparking investor concerns about potential disruptions from artificial intelligence (AI) and a new strategy focused on rapid user growth. Despite these worries, the company reported impressive metrics for 2025, including 52.7 million daily active users and a record $1.04 billion in revenue, reflecting a 39% year-over-year increase. The management’s shift towards prioritizing user acquisition over immediate monetization is a calculated risk aimed at long-term growth.
The stock currently trades at a price-to-earnings (P/E) ratio of 10.2, marking its lowest valuation since going public in 2021 and significantly below the S&P 500 average. While Wall Street anticipates a decline in earnings to $7.07 per share in 2026, the forward P/E remains attractive at 12.9, suggesting that the market may be undervaluing Duolingo’s potential.
For market professionals, Duolingo presents a compelling buying opportunity, especially for those willing to adopt a long-term perspective. The company’s strategic focus on expanding its user base could lead to substantial revenue growth and improved earnings by 2028, making it a stock worth considering amidst current market volatility.
Source: fool.com