Duolingo Inc

Stock futures traded lower early Tuesday, with Dow futures down 0.65%, S&P 500 futures down 0.62%, and Nasdaq-100 futures down 1.06%. GoPro shares surged over 82% premarket after YouTube creator Mark Fischbach, known as Markiplier, disclosed an 8.5% stake in the company, making him its largest individual shareholder. Robinhood rose 2.6% after Morgan Stanley upgraded it to Overweight with a $150 price target. Novartis climbed nearly 4% on positive late-stage trial data for its MS drug remibrutinib. Sono Group jumped about 55% after announcing a non-binding letter of intent to combine with Sports One, creating a publicly traded company that would acquire minority stakes in major sports leagues. Duolingo gained 3.8% after Evercore ISI raised its price target to $210.

Duolingo, Inc. (NASDAQ:DUOL) has seen its user engagement data challenge the narrative that free AI tutoring would make its paid language app obsolete, with daily active users growing 23% to 58.7 million in the second quarter of 2026. The stock, which had fallen more than 50% over the past 52 weeks, jumped about 7% after DA Davidson upgraded it to Buy with a target of $160 on August 18, 2026. CEO Luis von Ahn said DAU growth is likely to remain above 20% for the rest of the year, while paid subscribers rose 17% to 12.7 million. AI has flipped from a threat to a tailwind, as lower AI costs lifted gross margin to 72.6% and allowed Duolingo to expand its Video Call feature to Super subscribers. However, net income fell 26% year over year due to higher operating expenses, and short interest sits near 20.72% of shares, with 19 of 27 analysts still rating the stock Hold. The company trades at approximately 21.6 times forward earnings, and while DAU growth outpaces revenue growth, full-year revenue growth of about 16% is down from nearly 40% a year ago.

The Q2 earnings season for consumer subscription stocks showed mixed results, with Netflix reporting revenues of $12.56 billion, up 13.4% year over year, in line with analyst expectations but delivering the weakest full-year guidance update of the group. Roku outperformed with revenues of $1.35 billion, up 21.9% year over year, beating analyst expectations by 4.4%, while Bumble reported revenues of $210.5 million, down 15.2% year over year, and Chegg reported revenues of $51.85 million, down 50.7% year over year. Duolingo reported revenues of $298.5 million, up 18.3% year over year, surpassing analyst expectations by 0.9%. On average, share prices of the seven tracked consumer subscription stocks are down 2.6% since the latest earnings results.

Duolingo has acquired Animade, a London-based animation and motion design studio recognized for its work in product storytelling, brand, interactive experiences, and character animation. The acquisition expands Duolingo's Design Studio, strengthening a capability that has become increasingly important to delivering engaging product experiences and accelerating innovation, the company said. Mig Reyes, head of design at Duolingo, said great products aren't defined only by what they do, but by how they make people feel. The acquisition also expands Duolingo's creative presence in the UK, reinforcing its continued investment in world-class talent. Terms of the deal were not disclosed.

Apptopia reported in July 2026 that Duolingo’s average time spent per daily active user among 17-to-25-year-olds reached its highest level since January 2025, while the heaviest users of its AI chatbot are spending more time in the app. The data eases concerns that generative AI tools could pull learners away from language platforms and supports the value proposition of Duolingo Max, the GPT-4-powered subscription tier. If higher engagement persists, it could influence how investors view Max’s role in driving future average revenue per user and subscription growth. However, the risk remains that generative AI could eventually reduce the perceived need for paid structured learning.

Duolingo reported first-quarter 2026 earnings of 89 cents per share, beating the Zacks Consensus Estimate of 79 cents by 12.7%. Revenues rose 27% year over year to $292 million, topping the consensus estimate of $288.5 million. The company reached 56.5 million daily active users and 137.8 million monthly active users, with 12.5 million paid subscribers. Management guided for 2026 bookings of $1.28 billion and revenues of $1.21 billion, while expecting lower gross margins due to rising AI inference costs. Duolingo also announced a share repurchase authorization of up to $400 million in 2026.

Adobe, Duolingo, and Broadcom are three tech stocks that have sold off this year but may be poised for comebacks. Adobe shares are down 37% year to date as of July 8, yet the company posted 13% year-over-year revenue growth in its fiscal 2026 second quarter and saw its AI-first annual recurring revenue triple to over $500 million, suggesting AI is a tailwind rather than a headwind. Duolingo has lost almost 30% of its value this year, but first-quarter revenue rose 27% year over year and the company highlighted how AI is helping it strengthen courses and expand into new subjects. Broadcom is down more than 21% from its all-time high, yet fiscal 2026 second-quarter revenue grew 48% year over year, with AI-related revenue surging 143% and accounting for nearly half of total revenue, and CEO Hock Tan expects AI semiconductor revenue to more than triple year over year in the fiscal third quarter.

Duolingo shares have rallied more than 20% over the past month, recovering from a 70% decline over the past year, as investors respond to the company's expansion beyond language learning and its efficient use of artificial intelligence. The company is adding subjects like chess, math, and music, and AI has enabled it to publish 20,500 course units in the first quarter, nearly triple the average of 7,100 per quarter in 2025. Despite a deceleration in revenue growth to 27% year-over-year in the first quarter, net income rose 24%, and daily active users and paid subscribers each grew 21% to 56.5 million and 12.5 million, respectively. Duolingo is targeting 100 million daily active users by 2028 under a freemium model, and it guided for 17.1% revenue growth in the second quarter and 16.1% for full-year 2026.