Why Duolingo (DUOL) Is Up 12.8% After Q3 Beat And AI-Fueled Expansion Signs

• In recent days, Duolingo reported strong third-quarter 2025 results, including a 41% rise in revenue, daily active users above 50 million, and paid subscribers growing to 11.5 million, even as guidance pointed to slower fourth-quarter growth and weaker near-term profitability.
• At the same time, Duolingo’s rapid rollout of AI-powered features, expansion into new subjects like math, music, and chess, and insider share purchases by its CEO have reinforced confidence in its longer-term potential to convert a largely free user base into higher-value subscriptions.
• With that backdrop, we’ll examine how Duolingo’s AI-first expansion and strong user metrics could reshape its long-term growth-focused investment narrative.

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Duolingo Investment Narrative Recap

To own Duolingo, you need to believe its huge free user base and AI-first product can keep converting into profitable subscriptions, even as growth normalizes. The key near term catalyst remains user and bookings growth, particularly around newer subjects and higher priced tiers, while the biggest current risk is that rising AI competition and slowing guidance hint at pressure on pricing power and margins. The latest results do not materially change that risk profile, but they do sharpen focus on execution.

Among recent announcements, Duolingo’s rapid rollout of AI powered features such as Duolingo Max and its expansion into subjects like math, music, and chess are especially relevant here, because they sit at the intersection of user engagement and future monetization. These initiatives are central to the investment narrative that Duolingo can widen its addressable market and lift average revenue per user over time, even as headline growth moderates.

But against that promising story, investors should be aware of rising AI powered competition and the risk that Duolingo’s pricing power could...

Read the full narrative on Duolingo (it's free!)

Duolingo's narrative projects $1.7 billion revenue and $368.7 million earnings by 2028. This requires 23.7% yearly revenue growth and about a $251.5 million earnings increase from $117.2 million today.

Uncover how Duolingo's forecasts yield a $271.05 fair value, a 30% upside to its current price.

Exploring Other Perspectives

Twenty three members of the Simply Wall St Community currently see Duolingo’s fair value anywhere between US$250.52 and US$619.51, underlining how far opinions can diverge. Set against this, the recent slowdown in fourth quarter bookings guidance and margin concerns invite you to weigh how much of Duolingo’s AI driven user and revenue growth story is already reflected in those individual expectations.

Explore 23 other fair value estimates on Duolingo - why the stock might be worth just $250.52!

Build Your Own Duolingo Narrative

Disagree with existing narratives? Create your own in under 3 minutes - extraordinary investment returns rarely come from following the herd.

• A great starting point for your Duolingo research is our analysis highlighting 3 key rewards and 2 important warning signs that could impact your investment decision.
• Our free Duolingo research report provides a comprehensive fundamental analysis summarized in a single visual - the Snowflake - making it easy to evaluate Duolingo's overall financial health at a glance.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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