Duolingo (DUOL): Buy, Sell, or Hold Post Q3 Earnings?

Duolingo has gotten torched over the last six months - since August 2025, its stock price has dropped 69.7% to $112.02 per share. This may have investors wondering how to approach the situation.

Given the weaker price action, is now an opportune time to buy DUOL? Find out in our full research report, it’s free.

Why Are We Positive On Duolingo?

Founded by a Carnegie Mellon computer science professor and his Ph.D. student, Duolingo (NASDAQ:DUOL) is a mobile app helping people learn new languages.

1. Monthly Active Users Skyrocket, Fueling Growth Opportunities

As a subscription-based app, Duolingo generates revenue growth by expanding both its subscriber base and the amount each subscriber spends over time.

Over the last two years, Duolingo’s monthly active users, a key performance metric for the company, increased by 686% annually to 135.3 million in the latest quarter. This growth rate is among the fastest of any consumer internet business and indicates its offerings have significant traction.

2. Outstanding Long-Term EPS Growth

Analyzing the long-term change in earnings per share (EPS) shows whether a company's incremental sales were profitable – for example, revenue could be inflated through excessive spending on advertising and promotions.

Duolingo’s EPS grew at an astounding 259% compounded annual growth rate over the last three years, higher than its 41.7% annualized revenue growth. This tells us the company became more profitable on a per-share basis as it expanded.

3. Excellent Free Cash Flow Margin Boosts Reinvestment Potential

Free cash flow isn't a prominently featured metric in company financials and earnings releases, but we think it's telling because it accounts for all operating and capital expenses, making it tough to manipulate. Cash is king.

Duolingo has shown terrific cash profitability, driven by its lucrative business model and cost-effective customer acquisition strategy that enable it to stay ahead of the competition through investments in new products rather than sales and marketing. The company’s free cash flow margin was among the best in the consumer internet sector, averaging an eye-popping 34.8% over the last two years.

Final Judgment

These are just a few reasons why we're bullish on Duolingo. With the recent decline, the stock trades at 12.6× forward EV/EBITDA (or $112.02 per share). Is now the right time to buy? See for yourself in our comprehensive research report, it’s free.

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