Bullish indicating open at $55-$60, IPO prices at $37
On Friday, DA Davidson analyst Wyatt Swanson increased the price target for Duolingo Inc. (NASDAQ: NASDAQ:DUOL) shares to $600, up from the previous target of $470, while maintaining a "Buy" rating on the stock. The adjustment follows a proprietary analysis of Duolingo course enrollments, which Swanson uses as an indicator of the company’s user growth. This analysis spans from February 24, 2024, through May 25, 2025, and is compared against market consensus and company guidance. According to InvestingPro data, the stock has already delivered an impressive 58.34% return year-to-date, though current valuations suggest the stock may be trading above its Fair Value.
Swanson’s findings suggest that Duolingo’s daily active user (DAU) growth in the second quarter is surpassing the consensus estimates of 43.7% year-over-year growth. The performance is also slightly above Duolingo’s own growth guidance of 40-45%, which was provided by management during the first-quarter earnings report. This growth trajectory aligns with the company’s strong financial performance, as InvestingPro data shows revenue growth of 39.14% and impressive gross margins of 72.25%. Based on the data, the analyst believes that Duolingo’s current growth trajectory could lead to performance exceeding current market expectations.
In his report, Swanson stated, "We think there is upside to current consensus estimates and affirm our BUY-rating and bump our estimates and increase our price target from $470 to $600." The new price target is based on a valuation of 21 times the company’s projected 2026 enterprise value to revenue.
Duolingo’s positive outlook, as indicated by the revised price target, reflects confidence in the company’s ability to continue attracting and retaining users. The increase in the price target offers a more optimistic view of the company’s future revenue and market performance.
The analysis by DA Davidson underscores the importance of user growth metrics as a key driver for valuation in tech and education companies like Duolingo. With the company’s user base expanding at a rate that outpaces expectations, investors may see this as an encouraging sign of Duolingo’s market position and growth potential. InvestingPro subscribers can access over 20 additional insights about Duolingo, including detailed financial health metrics, where the company currently scores "GREAT" on the platform’s comprehensive evaluation system. For deeper analysis, investors can access the exclusive Pro Research Report, available for Duolingo and 1,400+ other top US stocks.
In other recent news, Duolingo Inc. reported impressive financial results for Q1 2025, significantly exceeding analysts’ expectations. The company achieved an earnings per share of $0.72, surpassing the forecast of $0.52, with revenue reaching $230.7 million against the expected $223.15 million. Scotiabank (TSX:BNS) analyst Nat Schindler has raised the price target for Duolingo’s stock to $600, citing strong user growth and improved monetization strategies, while JPMorgan maintains a $500 target, emphasizing the platform’s potential for sustained user expansion. DA Davidson also adjusted its price target to $470 following Duolingo’s robust first-quarter performance, which included a 3% revenue increase and an 11% rise in adjusted EBITDA over expectations.
The company’s growth strategy includes expanding content offerings and enhancing teaching efficacy, with recent developments such as the launch of 148 new courses this quarter. Analysts highlight Duolingo’s strong position in the global language learning market, with Scotiabank noting potential margin expansion due to changes in app store policies. Duolingo’s management remains confident, pointing to the company’s resilience in the face of economic challenges and its ongoing investment in AI-driven product development. These recent developments underscore Duolingo’s strategic initiatives to scale its user base and market share in the language learning industry.
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