Language learning app Duolingo is the IBD Stock Of The Day Tuesday. DUOL stock is in buy range.
Duolingo was founded in 2011 and went public at $102 per share in July 2021. DUOL stock was added to the IBD 50 list in late August.
The educational website and mobile app offers over 100 courses on more than 40 different languages — even fictional ones like High Valyrian from "Game of Thrones" and Klingon from "Star Trek". Duolingo hopes to be the star teacher for the 2 billion people in the world learning a foreign language. And it has a sizable student body with more than 500 million "Duolingo learners" globally, according to the 2022 Duolingo Language Report.
Duolingo operates on a freemium model with various subscription tiers without ads and access to premium features.
Super Duolingo, the biggest revenue driver, starts for $6.99 per month in the U.S. for an individual subscription with yearly and family pricing plans available.
In March, the company partnered with ChatGPT to offer generative AI tools to its language learners through its Duolingo Max offering.
Nearing Profitability
Duolingo reported earnings of 8 cents per share for its Q2 results on Aug. 8, ending a nine-quarter streak of losses, FactSet data shows. Analysts expect the company to turn a profit for the 2024 fiscal year.
Meanwhile, Duolingo averaged nearly 45% revenue growth the past four quarters, reporting a record $126.8 million for Q2. The company's paid subscribers jumped 59% to 5.2 million at the end of the quarter while subscription bookings surged 43% to $106.3 million. Total bookings, which also includes any in-app purchases, climbed 41% to $137.5 million.
Monthly active users rose 50% to 74.1 million and daily active users spiked 62% to 21.4 million.
For the third quarter, Duolingo expects revenue to range between $129.5 million and $132.5 million with total bookings between $136.5 million and $139.5 million. The company guides FY2023 revenue between $510 million and $516 million with bookings ranging from $569 million to $575 million.
FactSet analysts expect Duolingo to report a Q3 loss of 11 cents per share on $131.8 million in sales. Experts forecast a loss of 19 cents per share for FY2023 on $514.8 million in revenue.
Duolingo Stock
DUOL stock is trading in the buy range for a double-bottom base after pushing above the 162.20 buy point on Sept. 11. The current buy zone, which stretches 5% beyond the buy point, extends to 170.31.
Shares are trading above their technical moving averages and rallied 132% so far in 2023.
DUOL stock is more than 10% above its 50-day moving average, meaning it's a little extended from that key level. Also, the market rally is under heavy pressure, raising the risks for new buys.
Duolingo has a 93 Composite Rating out of a best-possible 99. The Composite Rating combines various technical indicators into one easy-to-read score. The company has a 74 EPS Rating. DUOL stock's relative strength line is at 52-week highs and it has a 96 RS Rating.
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