The average target price of DUOL is 492 and suggests 44% upside potential. Usually, this means a BUY recommendation among investment firms, or a recommendation to increase one's position in this instrument in the next 12 months. The most optimistic analyst has a target price of 600.0. This translates into 76% upside potential in the best case. On the other hand, the most pessimistic analyst has a target price of 375.0. This suggests 10% upside potential. Even the most pessimistic analyst believes there will be stock growth. 

Duolingo, Inc. develops a language-learning website and mobile app in the United States and China. The company offers courses in 40 different languages, including Spanish, English, French, Japanese, German, Italian, Chinese, Portuguese, and others. It also provides a digital language proficiency assessment exam. The company was incorporated in 2011 and is headquartered in Pittsburgh, Pennsylvania.

Duolingo, Inc.

Technology

The company does not pay dividends at all, or it pays them sporadically. There have only been a few years with dividend payments in the past ten years. 

DUOL reported revenue of USD 811mn in the last 12 months, up 8% from FY24. At the same time, the dynamics of cash flow, as measured by free cash flow (FCF), were drastically different. EPS grew 8% from FY24 to USD 2.14. Market expects EPS to reach USD 2.02 in FY25.

Over the past six months, the stock has consistently fallen, resulting in a 7% total decrease. When measured against its worldwide peers from the same industry (as shown above), the stock has been weaker, underperforming by 9ppts. This is equally valid for peers from the same country and industry. Given the stock's valuation versus its peers, its total price movement is slightly unfavourable.

The company has reported very poor EBITDA margins compared to its global peers in recent years. EBITDA margin amounted to 9.9% in the last 12 months, up from -1.1% in FY23. 

Historically, DUOL has reported weak net margins compared to its global peers. Specifically, in the last 12 months, this metric equalled 11.9%, a growth from 3.0% in FY23. 

In the last 12 months, the return on capital employed (RoCE) grew to 11.8%, below the peers. The consensus estimate for FY24 for RoCE is -20.8%, again behind the peers. 

Duolingo, Inc. reported a return on equity (RoE) of 12.5% in the last 12 months, up from 2.7% in FY23. The market consensus projects an RoE of 27.1% in FY24, this time above its peers. 

Another important profitability metric, return on assets (RoA), amounted to 8.2% in the last 12 months, an increase from 1.9% in FY23. The market analysts predict that RoA will be 18.4% in FY24, again stronger than its peers. 

The ratio of return on invested capital (RoIC) to the weighted average cost of capital (WACC) has been 0.2 in the past several years. This ratio implies a weak shareholder value creation. 

The institutional, legal, and compliance risks associated with the company's country are minimal. In combination with stringent business standards, shareholder rights are very highly protected.

DUOL boasts high trading liquidity. The average private investor can sell his common position in the stock immediately. Liquidity is usually quite stable and remains favourable on the days with the lowest activity. However, please consider that under highly turbulent market conditions, the trading volume tends to decrease significantly. 

No other major risks have been identified.

The risk of default is high. Among the negative credit factors, we point to bleak profitability, poor working capital management, weak debt servicing capacity, and inadequate interest coverage. We note resilient historical revenue growth, low margin volatility, solid cash flow generation, and an favourable capital structure, among the positive credit factors. 

In highly turbulent market conditions, DUOL is exceptionally volatile. In other words, the stock will be among the worst-performers in times of extreme market volatility or shocking company news. Standalone, the worst-day losses (less than 1% of the time) will likely be critical. 

In normal market circumstances, DUOL is exceptionally volatile. Put differently, without outstanding market volatility or shocking company news, the stock's price will change quite unpredictably. The stock's losses on its worst days (less than 1-5% of the time) will range from critical to immense. 

Considering past and projected metrics, the stock is distinctly 'expensive' compared to its peers. Specifically, the stock is 'expensive' on P/E, overvalued on EV/EBITDA, overpriced on P/FCF. 

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Duolingo, Inc.

$ 333.71

2

Duolingo, Inc.

$ 333.71

2

Risk factor

Profitability factor

Risk / Profitability

About

About

Risk factor

Profitability factor

$ 333.71

About

About

Duolingo, Inc.

$ 333.71

2

Duolingo, Inc.

$ 333.71

2

Risk factor

Profitability factor

Risk / Profitability

About

About

Risk factor

Profitability factor

$ 333.71

About

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