Duolingo Inc's (NASDAQ:DUOL) stock is trading like a broken business. The business itself tells a very different story. DUOL stock is making new 52-week lows, now back around IPO levels.
The stock is down nearly 73% from its peak hit just eight months ago, as investors price in a familiar fear. Generative AI will wipe out language-learning apps the way Alphabet Inc‘s (NASDAQ:GOOG) (NASDAQ:GOOGL) Google upended Chegg Inc (NYSE:CHGG).
It's a clean narrative — and possibly the wrong one.
The Market's AI Fear Is Misplaced
The bearish thesis assumes that AI will turn language learning into a commodity. If a chatbot can translate sentences or explain grammar on demand, why bother with an app? That logic treats Duolingo as content — something easily replaced by a prompt.
But Duolingo isn't selling answers. It's selling habits. You can't prompt your way into fluency, and you can't shortcut a 500-day learning streak. The platform's core advantage has always been behavior change, not information delivery — a distinction the market appears to be ignoring.
Duolingo Is Using AI, Not Losing To It
Ironically, AI is strengthening Duolingo's model. The company's "Max" tier, built around generative AI features like role-play and video calls with its characters, is driving higher engagement and premium subscriptions. That's showing up in the numbers: 41% year-over-year revenue growth, 11.5 million paid subscribers, and steadily expanding adjusted EBITDA.
Wall Street hasn't abandoned the bull case either. Analysts still see roughly 40%+ upside from current levels, with JPMorgan pointing to sustained growth and a clear path toward 30–35% long-term EBITDA margins.
Why It Matters For Investors
At today's price, Duolingo is being valued like an AI casualty — not an AI beneficiary. The stock reflects fear of disruption, while the fundamentals point to adaptation and monetization.
If the market is wrong about AI "killing" language apps, DUOL at IPO levels may look less like a falling knife and more like a mispriced growth asset.
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