Duolingo (DUOL) has seen a dramatic decline in its stock price, plummeting 80% from its peak in May 2025, as investors reacted to the rise of AI-powered competitors and the company’s focus on user growth over immediate profits. Despite this downturn, Duolingo is expanding its offerings beyond language learning, recently launching a chess course that boasts over 7 million daily users, highlighting its potential for growth in various educational sectors.
The financial implications are significant; Duolingo currently trades at just 12.5 times trailing earnings and 13.4 times free cash flow, metrics typically associated with mature companies or those facing financial distress. However, with a robust 40% net profit margin and a 35% revenue growth year-over-year in Q4 2025, the company is positioned well for recovery and long-term success, despite Wall Street’s concerns about AI competition.
For market professionals, Duolingo presents a compelling investment opportunity at these discounted valuations, especially as it leverages AI to enhance its educational platforms while maintaining strong profit margins.
Source: fool.com