We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Duolingo (DUOL - Free Report) is a Zacks Rank #1 (Strong Buy) that provides a mobile language learning platform. The company offers courses in 40 different languages, including Spanish, English, French, German, Italian, Portuguese, Japanese, and Chinese through its Duolingo app.
The stock has recently rallied, moving close to all-time highs after a big earnings beat. With analysts raising both earnings estimates and price targets, investors should be targeting any dip in the stock for a longer-term move higher.
About the Company
Duolingo was incorporated in 2011 and is headquartered in Pittsburgh, Pennsylvania. The company has about 700 full-time employees and a market cap of $9 billion.
Duolingo primarily generates revenue through a freemium model but also has a Duolingo Plus subscription that offers customers additional features, such as an ad-free experience, offline access to lessons, progress tracking, and more. The company also offers a version for schools and certification exams.
The stock has a Zacks Style Score of “A” in Growth and “A” in Momentum. It sports a Style Score of “F in Value, with a Forward PE of 183. So for value investors, this is not a stock for you and the rapid growth will be the focus for most investors.
Q4 Earnings Beat
On February 28th, the company reported a 24% earnings surprise to the upside, which was the ninth straight EPS beat.
Q1 revenues were raised to $164-167M v the $158M expected. With that, the company saw record bookings and paid subscribers jumped 57% year-over-year to 6.6 million.
Duolingo had 26.9 million daily active users during the quarter, up 65% year-over-year, and 88.4 million monthly active users, up 46% year-over-year.
The stock shot higher on the headline, moving to all-time highs. However, is has sold off since as that valuation remains a concern.
Analyst Estimates
Since earnings, analysts have been hiking estimates and price targets. Let’s go over what estimates have done over the last 7 days and then look at some price targets.
For the current quarter, analysts have hiked their estimates from $0.13 to $0.30, a jump of 130%.
For the current year, estimates have gone from $0.81 to $1.22, a jump of 50%.
The momentum looks to continue next year, with numbers going from $1.49 to $2.26, or 52%.
After the earnings report, Piper lifted its price target from $217 to $282. Here are some comments from the analyst note:
Duolingo’s results came in well-above expectations, supported by gravity defying DAU growth, and a steady increase in monetization. In our view, underpinning these impressive metrics is Duolingo’s early investments in AI, consistent execution and an incredible brand. We see upside to FY24 targets, and thereby reiterate our OW view on DUOL, supported by higher estimates and multiple.
Others that upped their targets included Barclays which went from $173 to $243 and UBS which lifted to $275, up from $230.
Goldman still held its Sell rating but lifted its target to $190 from $160.
The Technicals
After the headline earnings release the stock traded as high as $260, technically making a new all-time high. From there the stock sold off and was unable to make new highs during market hours.
So far, the stock has drifted lower after the impressive results, so let us go over some buyable levels for investors to enter long-term.
Looking at moving averages, the 50-day is at just over the $200 mark, while the 21-day is at $193. The stock gapped from the $198 area so a move under that $200 spot would be a gap fill.
Looking at Fibonacci levels, we have the halfway back level at $206 and the 61.8% at $198. This can be found by drawing the 2/21 lows to the 2/29 highs.
If the stock retakes the all-time highs at $245, investors can target the $290-300 area for profits. The 161.8% extension is $292 and can be found by drawing all-time highs to 2024 lows.
Bottom Line
Duolingo has a product offering that is being received well by its customers. The DAU and sub-growth look to be gaining momentum and the bottom line is showing investors results.
If the growth can continue through the year, the stock should have no problem taking out the recent highs and moving toward the $300 level.
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Bull of the Day: Duolingo (DUOL)
Duolingo (DUOL - Free Report) is a Zacks Rank #1 (Strong Buy) that provides a mobile language learning platform. The company offers courses in 40 different languages, including Spanish, English, French, German, Italian, Portuguese, Japanese, and Chinese through its Duolingo app.
The stock has recently rallied, moving close to all-time highs after a big earnings beat. With analysts raising both earnings estimates and price targets, investors should be targeting any dip in the stock for a longer-term move higher.
About the Company
Duolingo was incorporated in 2011 and is headquartered in Pittsburgh, Pennsylvania. The company has about 700 full-time employees and a market cap of $9 billion.
Duolingo primarily generates revenue through a freemium model but also has a Duolingo Plus subscription that offers customers additional features, such as an ad-free experience, offline access to lessons, progress tracking, and more. The company also offers a version for schools and certification exams.
The stock has a Zacks Style Score of “A” in Growth and “A” in Momentum. It sports a Style Score of “F in Value, with a Forward PE of 183. So for value investors, this is not a stock for you and the rapid growth will be the focus for most investors.
Q4 Earnings Beat
On February 28th, the company reported a 24% earnings surprise to the upside, which was the ninth straight EPS beat.
Q1 revenues were raised to $164-167M v the $158M expected. With that, the company saw record bookings and paid subscribers jumped 57% year-over-year to 6.6 million.
Duolingo had 26.9 million daily active users during the quarter, up 65% year-over-year, and 88.4 million monthly active users, up 46% year-over-year.
The stock shot higher on the headline, moving to all-time highs. However, is has sold off since as that valuation remains a concern.
Analyst Estimates
Since earnings, analysts have been hiking estimates and price targets. Let’s go over what estimates have done over the last 7 days and then look at some price targets.
For the current quarter, analysts have hiked their estimates from $0.13 to $0.30, a jump of 130%.
For the current year, estimates have gone from $0.81 to $1.22, a jump of 50%.
The momentum looks to continue next year, with numbers going from $1.49 to $2.26, or 52%.
After the earnings report, Piper lifted its price target from $217 to $282. Here are some comments from the analyst note:
Duolingo’s results came in well-above expectations, supported by gravity defying DAU growth, and a steady increase in monetization. In our view, underpinning
these impressive metrics is Duolingo’s early investments in AI, consistent execution and an incredible brand. We see upside to FY24 targets, and thereby reiterate our OW view on DUOL, supported by higher estimates and multiple.
Others that upped their targets included Barclays which went from $173 to $243 and UBS which lifted to $275, up from $230.
Goldman still held its Sell rating but lifted its target to $190 from $160.
The Technicals
After the headline earnings release the stock traded as high as $260, technically making a new all-time high. From there the stock sold off and was unable to make new highs during market hours.
So far, the stock has drifted lower after the impressive results, so let us go over some buyable levels for investors to enter long-term.
Looking at moving averages, the 50-day is at just over the $200 mark, while the 21-day is at $193. The stock gapped from the $198 area so a move under that $200 spot would be a gap fill.
Looking at Fibonacci levels, we have the halfway back level at $206 and the 61.8% at $198. This can be found by drawing the 2/21 lows to the 2/29 highs.
If the stock retakes the all-time highs at $245, investors can target the $290-300 area for profits. The 161.8% extension is $292 and can be found by drawing all-time highs to 2024 lows.
Bottom Line
Duolingo has a product offering that is being received well by its customers. The DAU and sub-growth look to be gaining momentum and the bottom line is showing investors results.
If the growth can continue through the year, the stock should have no problem taking out the recent highs and moving toward the $300 level.