'Language barrier': Duolingo shares sag 18%
The company provided a forecast for bookings for the first quarter and all of 2026 that falls significantly short of Wall Street’s average expectations. According to investing.com, Duolingo expects bookings to grow about 11% in 2026, versus about 20% that would have been achieved under its previous strategy. It forecast first-quarter bookings of about $301.5 million, below analysts’ estimates.
Investors are concerned that the company is shifting its focus from monetization to growing its user base faster, including expanding access to artificial intelligence-based features and emphasizing free and low-cost subscriptions. This could reduce revenue growth and profitability in the coming months.
Against this backdrop, major analyst firms have revised their estimates on Duolingo. Thus Morgan Stanley downgraded the stock from Overweight to Equal-Weight and lowered its target price from $245 to $100 per share. JP Morgan analysts also changed their rating to more cautious and significantly reduced their price target. Evercore ISI downgraded the recommendation to In-Line and cut the target from $330 to about $114.
Evercore said a shift to investing in free user experience, new subjects such as chess and math, and additional artificial intelligence features will slow revenue growth to 15%-18%, while EBITDA margins could fall to 25% in 2026.
Amid the news, Duolingo shares fell 18%, reflecting market concerns.
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