Duolingo (DUOL) Stock Forecast & Price Target

Duolingo Inc. achieved an impressive adjusted EBITDA of $80 million, reflecting a $32.5 million year-over-year increase, primarily driven by significant revenue growth that exceeded expectations. The company reported a robust 41% year-over-year revenue increase, alongside a notable rise in paid subscribers, reaching 11.5 million, surpassing consensus estimates. Furthermore, strong user engagement metrics, including a year-over-year increase of approximately 30% in daily active users, suggest positive momentum likely to continue into the upcoming quarter, bolstered by seasonal trends and promotional activities.

Duolingo’s gross margins, while above expectations at 72.5%, reflect a decline from 72.9% the previous year, suggesting potential challenges in subscriber penetration among monthly active users. The company's guidance for 4Q25 indicates anticipated bookings and adjusted EBITDA falling short of consensus estimates, with projected bookings between $329.5 million to $335.5 million and adjusted EBITDA between $75.4 million to $78.8 million. Additionally, increasing costs related to generative AI and hosting, alongside a reliance on direct-to-consumer revenue, may expose Duolingo to discretionary spending headwinds, contributing to a negative outlook.