Key Points
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Duolingo’s stock has plummeted by more than 75% from its peak on concerns that AI could disrupt its digital language education business.
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The company has proven it can use AI to improve its platform, and it recently outlined a plan to nearly double its user base by 2028.
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Duolingo stock is trading at a compelling valuation right now, potentially paving the way for blistering returns in both the short and long terms.
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Duolingo (NASDAQ: DUOL) operates the world’s largest digital language education platform. Its stock surged during 2024 and 2025 to hit a record high of about $540 in May of last year, but it has since plummeted by more than 75% amid concerns that artificial intelligence-powered translation tools could reduce demand for language lessons.
Plus, Duolingo’s executive team recently made a business decision to prioritize user growth over the next couple of years, at the expense of monetization. As a result, Wall Street is pricing in less revenue and earnings growth, which has further contributed to the stock’s decline.
However, I think the sell-off is overdone. Duolingo has already proven it can use AI to improve its platform, and focusing on user growth in the near term could lead to significantly higher revenue over the long term. The stock is now incredibly cheap, so here’s why I predict it will double by the time 2027 rolls around.
AI could be a tailwind, not a risk, for Duolingo
Duolingo’s mobile-first approach and highly interactive lessons are the secrets to its success. Around 56.5 million people used its app every single day during the first quarter, and while most of them were free users whom the company monetized through advertising, 12.5 million users were paying for subscriptions to unlock extra features.
A growing number of those features are powered by AI. Users who pay for a Super Duolingo or Duolingo Max plan can access Video Call, which features a digital avatar that helps them practice their foreign language speaking skills. During the first quarter, the number of spoken words per user who engaged with this tool more than doubled compared to the year-ago period, so it’s clearly proving to be popular.
Because of the success of Video Call, Duolingo plans to introduce more speaking-based lessons for free users to increase the platform’s popularity. This is one of the ways the company is sacrificing monetization in the short run: Making speaking-based tools more widely available will diminish the value of paid features like Video Call, but it could significantly increase the platform’s overall user base in the long run.
A growing user base will be a net positive over the long term
Management’s decision to sacrifice monetization in favor of faster user growth is already having a negative impact on Duolingo’s financial performance. Revenue increased by 27% year over year during the first quarter, which was a solid result at face value, but a deceleration from its 38% growth in the same quarter of 2025.
That might sound like bad news, but management believes its strategic shift could lead to Duolingo’s daily active user base nearly doubling to 100 million by 2028. Theoretically, a larger user base will make the platform harder to disrupt, so it will be more defensible against new competitors. Moreover, when the company decides to focus on monetization again in the future, it will have more overall users whom it can attempt to convert into paying subscribers.
If Duolingo converts free users into subscribers in 2028 at the same rate as it did in 2025, then we can assume its paying user base and annualized revenue will also eventually double from current levels. At that point, investors who sold Duolingo stock during its recent decline might wish they had held on.
Why Duolingo stock could double in the next six months
Since Duolingo’s management team is focused on a two-year plan, I don’t expect the company’s financial results to shoot the lights out in the near term. My prediction that the stock could double by 2027 is based mostly on its valuation — in other words, I think the stock overshot to the downside, and is poised to recover some ground now that the dust has settled.
Duolingo stock is trading at a price-to-sales (P/S) ratio of just 5.7 as I write this, which is a significant discount to its average of 15.5 since going public in 2021. Even if the stock doubled from here, it would still have a below-average P/S ratio of 11.4.
DUOL PS Ratio data by YCharts.
Plus, based on Duolingo’s trailing-12-month earnings of $8.74 per share, its stock is trading at a P/E ratio of 15.3, which is significantly cheaper than the broader market. The stock would have to more than double just to match the P/E of the Nasdaq-100 index, which is currently 35.2.
In summary, I think the sell-off in Duolingo stock is way overdone, and as long as the company doesn’t dramatically miss Wall Street’s expectations in its next couple of quarters, investors who buy it at around the current level could enjoy solid short-term and long-term rewards.
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Anthony Di Pizio has positions in Duolingo. The Motley Fool has positions in and recommends Duolingo. The Motley Fool has a disclosure policy.
