Duolingo Inc. (NASDAQ:DUOL) shares are down during Friday’s premarket session following the company’s recent earnings report, which highlighted strong user growth but also indicated a shift in focus towards enhancing the free learner experience.
Several major firms lowered their ratings and sharply reduced their price forecasts following the earnings report. Notably, Morgan Stanley downgraded the stock to Equal Weight and slashed its price forecast to $100 from $245, citing mounting concerns about the company’s growth trajectory.
Bookings Surpass $1 Billion In 2025
“We closed 2025 with strong momentum, surpassing 50 million daily active users and generating more than $1 billion in bookings for the first time,” said Luis von Ahn, Co-Founder and CEO of Duolingo, in a press release on Thursday.
“At the same time, advances in AI are fundamentally reshaping how people learn, and we believe this is a pivotal moment for our company. In 2026, we are deliberately prioritizing user growth and teaching better. We’ll focus on improving the free learner experience to grow word of mouth and feed our next user growth engines like chess, math, and music, even though that moderates near-term financial growth.”
“We believe this strategy positions Duolingo to reach 100 million daily active users in the medium-term and build a significantly larger, more durable business in the long-term,” Luis von Ahn commented.
Performance Metrics
Duolingo’s fourth-quarter sales reached $282.87 million, up 35% year over year, beating the consensus of $275.93 million.
Daily active users (DAUs) grew 30% year over year in the quarter to 52.7 million, despite lapping 51% growth a year ago.
Paid subscribers were 12.2 million (+28%), with monthly active users reaching 116.7 million (+14%).
Total bookings increased 24% year over year to $336.8 million, or 20% on a constant-currency basis, reflecting continued subscriber growth and healthy conversion.
The language app generated net income of $41.9 million and $84.3 million in adjusted EBITDA, with margin expanding nearly five percentage points year over year to 29.8%.
Gross margin expanded approximately 90 basis points year over year to 72.8%, primarily driven by increasing subscription margins and a greater mix of revenue coming from subscriptions.
Guidance
Duolingo expects fiscal 2026 sales of $1.197-$1.221 billion compared to the consensus of $1.264 billion, with adjusted EBITDA of $299-$305 billion.
Duolingo expects first-quarter 2026 sales of $288.5 million compared to the consensus of $290.52 million, with adjusted EBITDA of $73.6 million.
Share Buyback
The company also announced a share repurchase program of up to $400 million, reflecting its strategy to return capital to shareholders while maintaining flexibility for long-term investments.
Technical Analysis
The stock is currently trading 23.88% below its 20-day simple moving average (SMA) and 25.4% below its 100-day SMA, indicating significant short-term weakness. Over the past 12 months, shares have decreased substantially and are currently positioned closer to their 52-week lows than highs.
The RSI is at 50.00, which is considered neutral territory, indicating that the stock is neither overbought nor oversold. Meanwhile, MACD is at -1.25, below its signal line at -0.75, suggesting bearish pressure on the stock.
The combination of neutral RSI and bearish MACD indicates mixed momentum, reflecting uncertainty in the stock’s direction.
- Key Resistance: $104.50
- Key Support: $89.00
Analyst Consensus & Recent Actions: The stock carries a Buy Rating with an average price target of $288.89. Recent analyst moves include:
- Evercore ISI Group: Downgraded to In-Line (Lowers Target to $114.00) (Feb. 27)
- Morgan Stanley: Downgraded to Equal-Weight (Lowers Target to $100.00) (Feb. 27)
DUOL Price Action: Duolingo shares were down 23.88% at $89.40 during premarket trading on Friday, according to Benzinga Pro data.
Photo by DANIEL CONSTANTE via Shutterstock
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