After a remarkable surge of 43% in 2024, shares of the language-learning application Duolingo have continued to climb, gaining another 47% so far in 2025. Such a rapid increase has prompted scrutiny, with select analysts on Wall Street suggesting that Duolingo stock may be overvalued. Given the company’s current trading status, many investors are left wondering: is it time to sell?
Currently, stock research platform TipRanks features insights from 15 analysts covering Duolingo. While none of them recommend selling, the average price target they provide is $476 per share, which is slightly below the current trading price of Duolingo. This indicates that the stock is trading above the intrinsic value as determined by these professionals. The question arises—should investors act on this information and consider selling?
The analysis of stock valuation is often based on a short-term timeframe, typically looking at the next 12 to 18 months. However, for those looking to maximize their investment returns, adopting a long-term perspective can be crucial. Historical data shows that investors who hold stocks for a period of five years or more tend to outperform those who engage in more frequent trading. Still, the buy-and-hold strategy is not foolproof; the underlying business must maintain its health and growth trajectory during the holding period. Thus, it is essential to ask: is Duolingo poised for long-term success?
Duolingo has garnered attention for its language-learning courses, and the demand for its services is palpable. The platform has seen nearly 47 million daily active users, with 10 million paying for subscriptions—a significant 40% increase from the previous year. This explosive growth demonstrates a solid demand for its products, raising hope for stakeholders.
The company attributes its success to a couple of standout strategies. For one, Duolingo actively employs A/B testing to fine-tune its platform based on user preferences and behaviors. Additionally, gamification—integrating game-like elements into the learning process—has proven effective in keeping users engaged and motivated.
Moreover, Duolingo is expanding its horizon beyond language learning, branching into new verticals such as math, music, and chess. This expansion not only broadens its market opportunities but also paves the way for future growth. Companies that can diversify and expand their product offerings tend to perform well, especially when leveraging existing strengths to venture into new territories.
Since the beginning of 2022, Duolingo has averaged quarterly revenue growth exceeding 40%, effectively doubling its revenue approximately every two years. This remarkable growth trajectory underscores the company’s potential for long-term profitability.
The role of generative artificial intelligence (AI) is also reshaping the landscape for Duolingo, enabling faster product development. In the first quarter alone, the company launched nearly 150 new language courses. While this rapid expansion could be viewed positively, it does introduce risks. The same generative AI tools that empower Duolingo could make it easier for competitors to enter the market, potentially compromising Duolingo’s market share.
Considering these factors, is Duolingo stock a bargain for potential investors? While the company is experiencing remarkable growth, it currently trades at nearly 30 times its sales, which is not usually considered a buying opportunity. The valuation metrics indicate that much of the stock’s gains this year can be attributed to an inflated valuation multiple, prompting caution for prospective investors.
As Duolingo grows, there likely will be a deceleration in its growth rate. If the company manages to maintain a 40% growth trajectory, it could be on track to generate $4.0 billion in annual revenue by 2029. Even with this ambitious forecast, Duolingo’s market capitalization stands at approximately $21.9 billion, which means its trading price still reflects a substantial premium at 5.5 times the expected sales in 2029.
Given this context, investors face the challenging task of balancing a thriving business with solid fundamentals against an increasingly high share price. While this analysis does not suggest that existing Duolingo shareholders should hastily divest their holdings, it does highlight the importance of valuation when considering new investments.
As an investor, it’s wise to approach Duolingo stock with a long-term perspective. For those currently holding shares, it may be prudent to maintain their investment, watching for favorable market conditions or valuation adjustments before making additional moves. Ultimately, patience and careful consideration of both the company’s fundamentals and market dynamics will be key to navigating this evolving landscape.
In conclusion, while Duolingo has proven its prowess in the language-learning space, its current stock valuation raises important questions for investors. Looking ahead, those considering new investments should prioritize a long-term outlook while remaining aware of potential risks and market shifts. Whether to buy, hold, or sell ultimately depends on individual investment strategies and risk tolerance. As the market continues to fluctuate, staying informed and vigilant will serve investors well in their decision-making processes.
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