Should You Buy the Post-Earnings Surge in Duolingo Stock or Is It Too Late?
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Duolingo (DUOL) shares soared as much as 35% on Thursday morning after reporting Q2 results that handily topped Street estimates and raising guidance for the full year.
DUOL is being rewarded this morning also because it announced plans of acquiring NextBeat, a music gaming startup, for an undisclosed amount to broaden its app offerings.
Duolingo stock has, however, reversed at least half of its intraday gain in recent hours and is now down more than 27% versus its year-to-date high of about $544 set in the second week of May.
AI Is Serving as a Tailwind for Duolingo stock
DUOL shares ripped higher today primarily because the company’s earnings release confirmed AI isn’t resulting in a growth slowdown as initially expected.
In fact, the Nasdaq-listed firm has integrated artificial intelligence solutions into its online language learning platform, which are actually helping “drive” user growth, according to Luis von Ahn, the company’s chief executive.
On Thursday, Duolingo guided for its revenue to grow by 36% on a year-over-year basis in 2025.
This further confirms that Duolingo stock merits a place in growth-focused portfolios this year.
Is Now the Right Time to Load Up on DUOL Shares?
Despite a 37% AI-driven increase in paid subscribers to 10.9 million in Duolingo’s second quarter, Wolfe Research continues to rate the mobile learning platform at “Peer Perform” only.
The investment firm is sticking with its cautious view on DUOL stock mostly because of valuation concerns.
Duolingo shares are currently going for a forward price-earnings (P/E) multiple of nearly 118x, well above best-of-breed AI stocks like Nvidia (NVDA) that’s currently trading at less than 45x only.
Wall Street Remains Optimistic About Duolingo
Other Wall Street analysts, however, are significantly more bullish on Duolingo stock for the back half of 2025.
According to Barchart, the consensus rating on DUOL shares currently sits at “Moderate Buy” and the mean target of about $480 indicates potential upside of nearly 19% from current levels.
On the date of publication, Wajeeh Khan did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.