Zinger Key Points
- Analyst projects Duolingo to achieve 20%+ revenue growth, driven by user expansion, gamification, and advanced English learning.
- Duolingo expected to make progress toward 30–35% long-term EBITDA margin, supported by scale and cost discipline.
- Don’t miss this list of 10 overlooked stocks—including one paying a 9% dividend—before Wall Street catches on.
JPMorgan analyst Bryan M. Smilek reiterated the Overweight rating on Duolingo, Inc. DUOL, with a price forecast of $500.
Smilek stated that he continues to see significant potential for Duolingo to deliver strong user growth over multiple years.
The analyst noted that motivations for language learning vary by geography and language. Duolingo's 2024 Language Learning Report identifies education, social connections, entertainment, travel, and career advancement as common drivers. This highlights the diversity of both the company's user base and its total addressable market.
Also Read: Duolingo Charms Wall Street With Viral Surge, AI Power, Soaring Subscriptions
In terms of penetration, Duolingo boasts 130 million monthly active users. Smilek says that represents only about 18% of global online language learners and roughly 7% of all language learners worldwide.
Looking ahead, Duolingo is well-positioned to grow its global presence by broadening its content library, improving teaching effectiveness, investing in underpenetrated regions, and enhancing both courses and the overall learner experience, the analyst writes.
With around 90% of its user growth attributed to organic channels, Smilek sees the company to continue scaling by leveraging social-first marketing, influencer partnerships, and brand collaborations, while also expanding its localized efforts through new country manager hires in international markets.
According to Smilek, the company is also seeing success in expanding monetization efforts and growing its base of paid subscribers. Additionally, improvements in teaching effectiveness—particularly in advanced English learning—are helping to expand its total addressable market.
Continued momentum across its English proficiency test, in-app purchases, and advertising revenue streams further support this outlook.
Smilek notes that Duolingo is on track to make significant progress toward its long-term adjusted EBITDA margin target of 30–35%, aided by economies of scale and disciplined cost management.
Price Action: DUO; shares are trading lower by 0.58% to $491.42 at last check Tuesday.
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