Duolingo (NASDAQ:DUOL) Shares Gap Down Following Analyst Downgrade

Duolingo, Inc. (NASDAQ:DUOL)’s share price gapped down prior to trading on Friday after DA Davidson lowered their price target on the stock from $170.00 to $85.00. The stock had previously closed at $117.45, but opened at $92.26. DA Davidson currently has a neutral rating on the stock. Duolingo shares last traded at $100.5630, with a volume of 10,397,381 shares trading hands.

Other equities research analysts also recently issued reports about the stock. Evercore reaffirmed a “hold” rating and set a $114.00 target price on shares of Duolingo in a research note on Friday. Citigroup reaffirmed a “neutral” rating and issued a $101.00 target price (down from $270.00) on shares of Duolingo in a report on Friday. UBS Group set a $245.00 price target on Duolingo in a research report on Monday, January 5th. JPMorgan Chase & Co. reaffirmed a “neutral” rating and set a $95.00 price target (down from $200.00) on shares of Duolingo in a report on Friday. Finally, Citizens Jmp downgraded Duolingo from a “market outperform” rating to a “hold” rating in a research note on Thursday, November 6th. Five analysts have rated the stock with a Buy rating, seventeen have assigned a Hold rating and one has given a Sell rating to the company’s stock. Based on data from MarketBeat.com, the stock currently has a consensus rating of “Hold” and an average price target of $220.26.

Insider Buying and Selling

In other Duolingo news, CFO Matthew Skaruppa sold 3,986 shares of the firm’s stock in a transaction on Wednesday, February 18th. The stock was sold at an average price of $113.52, for a total transaction of $452,490.72. Following the completion of the transaction, the chief financial officer owned 31,631 shares of the company’s stock, valued at approximately $3,590,751.12. This trade represents a 11.19% decrease in their ownership of the stock. The transaction was disclosed in a filing with the SEC, which is accessible through this link. Also, General Counsel Stephen C. Chen sold 1,901 shares of the business’s stock in a transaction dated Wednesday, February 18th. The shares were sold at an average price of $113.26, for a total transaction of $215,307.26. Following the completion of the transaction, the general counsel directly owned 30,545 shares of the company’s stock, valued at $3,459,526.70. The trade was a 5.86% decrease in their position. Additional details regarding this sale are available in the official SEC disclosure. Insiders sold a total of 14,939 shares of company stock worth $1,676,291 in the last quarter. Corporate insiders own 15.67% of the company’s stock.

Duolingo News Summary

Here are the key news stories impacting Duolingo this week:

• Positive Sentiment: Q4 results beat estimates — revenue and EPS topped expectations and the company reported strong margin metrics. Earnings Report
• Positive Sentiment: User scale: Duolingo closed 2025 with >50M daily active users and topped $1B in bookings — evidence of continued product adoption. Shareholder Letter
• Positive Sentiment: Strong full-year profitability: reports note roughly $400M profit for 2025, underlining unit economics at scale. Profit Article
• Neutral Sentiment: Management is explicitly shifting to prioritize user growth over near-term monetization, saying bookings and revenue growth will slow as they aim for 100M DAUs by 2028. Reuters Strategy Piece
• Neutral Sentiment: Management set explicit DAU growth targets and framed short-term profitability trade-offs as part of a longer-term expansion plan. Seeking Alpha
• Negative Sentiment: Guidance disappointment: FY‑2026 and Q1 2026 revenue/bookings guidance came in below Street expectations, triggering sharp intraday selling. Guidance/Miss Report
• Negative Sentiment: Analyst downgrades and price-target cuts accelerated the sell-off (multiple firms cut targets and/or ratings after the call). Analyst Moves
• Negative Sentiment: Regulatory/litigation risk: investor law firms have launched probes into DUOL, increasing uncertainty and potential legal overhang. Investigation Alert
• Negative Sentiment: High-volume selling and negative press amplified moves — multiple outlets flagged a steep intraday decline and described investor concern over the strategy shift. Barron’s

Institutional Inflows and Outflows

Hedge funds and other institutional investors have recently modified their holdings of the stock. Baillie Gifford & Co. grew its position in shares of Duolingo by 71.9% during the fourth quarter. Baillie Gifford & Co. now owns 4,861,445 shares of the company’s stock worth $853,184,000 after buying an additional 2,033,611 shares in the last quarter. Dragoneer Investment Group LLC increased its position in Duolingo by 324.4% in the 3rd quarter. Dragoneer Investment Group LLC now owns 1,580,787 shares of the company’s stock valued at $508,760,000 after acquiring an additional 1,208,346 shares during the period. State of Michigan Retirement System boosted its position in Duolingo by 5,800.0% during the 4th quarter. State of Michigan Retirement System now owns 560,500 shares of the company’s stock worth $98,368,000 after acquiring an additional 551,000 shares during the period. FIL Ltd increased its holdings in shares of Duolingo by 1,715,575.9% during the fourth quarter. FIL Ltd now owns 497,546 shares of the company’s stock valued at $87,319,000 after purchasing an additional 497,517 shares during the period. Finally, Norges Bank acquired a new stake in Duolingo in the fourth quarter worth about $86,159,000. Institutional investors and hedge funds own 91.59% of the company’s stock.

Duolingo Stock Down 14.0%

The firm has a market cap of $4.67 billion, a price-to-earnings ratio of 11.85, a price-to-earnings-growth ratio of 0.54 and a beta of 0.86. The company has a quick ratio of 2.82, a current ratio of 2.82 and a debt-to-equity ratio of 0.07. The stock’s 50 day moving average is $144.48 and its 200 day moving average is $223.84.

Duolingo (NASDAQ:DUOL) last released its earnings results on Thursday, February 26th. The company reported $0.91 earnings per share (EPS) for the quarter, topping analysts’ consensus estimates of $0.79 by $0.12. The firm had revenue of $282.87 million for the quarter, compared to analyst estimates of $275.95 million. Duolingo had a return on equity of 14.02% and a net margin of 40.03%.Duolingo’s revenue was up 35.0% on a year-over-year basis. Analysts forecast that Duolingo, Inc. will post 2.03 EPS for the current year.

Duolingo Company Profile

Duolingo, Inc (NASDAQ:DUOL) is a technology-driven education company that operates a widely used language-learning platform. Founded in 2011 by Luis von Ahn and Severin Hacker, Duolingo offers a freemium service featuring bite-sized lessons, gamified exercises and adaptive learning algorithms. The company’s core product is its mobile and web application, which supports instruction in more than 40 languages, ranging from widely spoken tongues such as English and Spanish to lesser-taught options including Irish and Swahili.

In addition to its flagship language courses, Duolingo has expanded its product suite to include the Duolingo English Test, an on-demand, computer-based English proficiency exam designed for academic and professional admissions.