Duolingo (DUOL): Analyst Optimism and Growth Forecasts Spark Valuation Interest Following Positive Earnings Outlook

Duolingo (DUOL) is set to report its latest earnings, drawing attention thanks to upbeat market sentiment and expectations of sharp growth in both profit and revenue compared to last year.

See our latest analysis for Duolingo.

Duolingo’s share price has been steady despite some choppy trading as investors weigh blockbuster earnings growth against challenges in core markets. With a 1-year total shareholder return of 13.8% and strong expansion in new regions, momentum appears to be building for the long term.

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But with shares trading well below most analyst estimates, is Duolingo a bargain for growth-minded investors? Or does the current price already reflect the company’s future success?

Most Popular Narrative: 28.6% Undervalued

According to the most widely followed narrative, Duolingo’s fair value is estimated at $451.74, which is notably above the last close price of $322.63. This difference sets the stage for a deeper look at the ambitious growth drivers and bold expectations powering the valuation.

Rapid adoption and engagement growth in emerging international markets (notably China and broader Asia), fueled by partnerships and the ongoing rise in demand for multilingual skills as global social and economic mobility increases, supports sustained expansion of Duolingo’s total addressable market, positively impacting revenue and long-term earnings potential.

Read the complete narrative.

Is there a secret formula behind the stunning valuation gap? The answer lies in fast-rising revenues, bigger profit margins, and a belief that Duolingo will sustain growth rates that outpace peers. Which aggressive assumptions are built into these numbers? See for yourself and discover what could push Duolingo far beyond today’s price.

Result: Fair Value of $451.74 (UNDERVALUED)

Have a read of the narrative in full and understand what’s behind the forecasts.

However, persistent slowdowns in daily active user growth and rising regulatory roadblocks in other countries could hinder Duolingo’s ambitious global expansion story.

Find out about the key risks to this Duolingo narrative.

Another View: Pricing by Earnings Ratio

Taking a step back from projections and narratives, the current price-to-earnings ratio for Duolingo stands at 126.2 times, which is much higher than the industry average of 18.3 and the peer group average of 35.8. Even compared to a fair ratio of 38.4, Duolingo looks steeply valued. This wide gap signals substantial valuation risk if expectations stumble. Could future growth justify such a premium?

See what the numbers say about this price — find out in our valuation breakdown.

Build Your Own Duolingo Narrative

If you see things differently or want to dig into the numbers yourself, you can build your own take in just a few minutes, so Do it your way

A great starting point for your Duolingo research is our analysis highlighting 3 key rewards and 1 important warning sign that could impact your investment decision.

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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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