Duolingo (DUOL) Stock Forecast & Price Target

Duolingo Inc. reported an impressive adjusted EBITDA of $80 million, reflecting a significant year-over-year increase of $32.5 million, driven by strong revenue performance that exceeded prior estimates. The company also demonstrated robust subscriber growth, with paid subscribers reaching 11.5 million, slightly above consensus estimates, highlighting successful conversion from free to paid users. Additionally, Duolingo experienced a remarkable revenue growth of 41% year-over-year, indicating strong user engagement and the potential for continued growth driven by seasonal promotions and elevated engagement metrics.

Duolingo Inc. has displayed a decrease in gross margins, dropping from 72.9% to 72.5% year-over-year, suggesting potential challenges in subscriber growth relative to monthly active users. For the fourth quarter of 2025, Duolingo's guidance indicates lower-than-expected bookings and adjusted EBITDA, with projections of $329.5 million to $335.5 million and $75.4 million to $78.8 million respectively, both falling short of consensus estimates. Additionally, the company faces pressure from rising generative AI and hosting costs, alongside risks associated with discretionary consumer spending, which may hinder future growth.