Shares of Duolingo Inc (NASDAQ:DUOL) nosedived in early trading on Tuesday, after the company Wednesday reported mixed third-quarter results.
Here are some key analyst takeaways:
- KeyBanc Capital Markets analyst Justin Patterson downgraded the rating from Overweight to Sector Weight.
- DA Davidson analyst Wyatt Swanson reiterated a Neutral, while slashing the price target from $300 to $220.
- Needham analyst Ryan MacDonald maintained a Buy rating, while cutting the price target from $460 to $300.
Check out other analyst stock ratings.
KeyBanc Capital Markets: Duolingo reported revenues of $272 million and EBITDA of $80 million. That’s higher than Street estimates of $261 million and $73 million, respectively, Patterson said in the downgrade note. Daily active users (DAUs) of 50.5 million were in-line, he added.
The company guided to fourth-quarter bookings and EBITDA of $329.5-$335.5 million and $75.4-$78.8 million, below Street estimates of $343.6 million and $81 million, respectively, the analyst stated. "While management’s tactical decision to invest more in teaching effectively may pay off in a higher growth rate in future years, the NT consequence is a reduction to our 2026E/2027E bookings and EBITDA," he further wrote.
DA Davidson: Duolingo's DAU growth decelerated to 36% year-on-year, from 40% in the previous quarter, Swanson said. DAU growth "tracked consistently below consensus over the duration of 3Q," he wrote.
The fourth-quarter bookings and EBITDA margin guidance suggests that the company is planning to increase marketing. The goal is to drive additional users to the platform, the analyst stated. Monetization has been "moved to the backburner," he added.
Needham: Duolingo reported a strong beat and raised its full-year guidance, MacDonald said. The company's DAUs and MAUs were below expectations, he added.
The focus was on management’s commentary on a shift "towards long term investments over near opportunities," the analyst wrote. The prioritization of these long-term investments resulted in the fourth-quarter bookings and EBITDA outlook coming in below Street expectations, he further stated.
DUOL Price Action: Shares of Duolingo had declined by 26.71% to $190.56 at the time of publication on Thursday.
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