Duolingo, Inc. (DUOL): A Bull Case Theory

We came across a bullish thesis on Duolingo, Inc. on Rijnberk InvestInsights’s Substack by Daan | InvestInsights. In this article, we will summarize the bulls’ thesis on DUOL. Duolingo, Inc.'s share was trading at $341.08 as of October 15th. DUOL’s trailing and forward P/E were 128.28 and 69.44 respectively according to Yahoo Finance.

Duolingo has evolved from a gamified language-learning app into a leading digital education platform, combining entertainment, behavioral science, and AI to drive engagement across more than forty languages. Its core product, generating the majority of revenue through subscriptions, leverages a freemium model to convert millions of free users into paying subscribers while maintaining broad global reach.

Over the past decade, Duolingo has expanded into adjacent areas including literacy, math, chess, and English proficiency testing, creating a scalable multi-disciplinary platform with growing recognition among universities worldwide. The company’s founder-led leadership, strong brand equity, and habit-forming gamified design have driven consistent growth, with revenue increasing at a 40%+ CAGR and free cash flow margins exceeding 30%, making it a rare “Rule of 70” business.

Duolingo’s market position is dominant within app-based language learning, commanding roughly 60% of activity despite reaching only 5% of the global language-learning population, leaving significant room for expansion. Long-term growth is supported by rising global demand for English, under-penetrated subscription adoption, AI-enabled upsell opportunities, and international expansion into emerging markets.

Recent product launches, including the Chess and Math courses, have seen strong adoption, broadening the company’s addressable market and deepening user engagement. Q2 2025 results underscored this momentum, with 41% YoY revenue growth, 46% subscription growth, record EBITDA of $79 million, and free cash flow of $86 million, alongside an exceptionally strong balance sheet with $1.1 billion in cash and minimal debt.

The primary risk to the investment thesis is AI disruption, particularly real-time translation tools, which could reduce the need for casual language learning. While AI also presents tailwinds through Duolingo Max and accelerated course creation, execution is critical to sustaining its moat. At current prices of $326, Duolingo’s premium valuation limits upside, making it most compelling below $260. Nonetheless, the company remains a high-quality, high-growth platform positioned for long-term expansion in digital education.

Previously we covered a bullish thesis on Duolingo, Inc. (DUOL) by Summit Stocks in March 2025, which highlighted the company’s gamified language-learning model, expansion into math and music, and strong subscription-driven growth. The company's stock price has appreciated approximately by 15.94% since our coverage. The thesis still stands as Duolingo maintains market dominance and high growth potential. Daan | InvestInsights shares a similar approach but emphasizes its evolution into a multi-disciplinary digital education platform and AI-driven opportunities.

Duolingo, Inc. is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 55 hedge fund portfolios held DUOL at the end of the second quarter which was 51 in the previous quarter. While we acknowledge the potential of DUOL as an investment, we believe certain AI stocks offer greater upside potential and carry less downside risk. If you're looking for an extremely undervalued AI stock that also stands to benefit significantly from Trump-era tariffs and the onshoring trend, see our free report on the best short-term AI stock.

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Disclosure: None.