Duolingo (DUOL) Stock Forecast & Price Target

Duolingo Inc. demonstrated robust financial performance with a total revenue growth of 41% year-over-year and an adjusted EBITDA increase to $80.0 million, surpassing previous estimates by $8.7 million. The company also reported a strong subscriber base, with 11.5 million paid subscribers exceeding consensus expectations and indicating ongoing strength in converting free users to paid accounts. Additionally, the positive seasonality effect anticipated in December, along with a consistent increase in daily active users, positions Duolingo for continued engagement and revenue growth.

Duolingo's gross margins have shown a slight decline from 72.9% to 72.5% year-over-year, indicating potential challenges in sustaining subscriber growth as reflected in a decreasing subscriber penetration rate among monthly active users. The company's guidance for 4Q25 projects bookings and adjusted EBITDA below consensus estimates, suggesting lower-than-expected financial performance and heightened operational costs due to investments in generative AI and increased hosting expenses. Furthermore, the company's reliance on direct-to-consumer revenue exposes it to potential headwinds from discretionary spending patterns, which may negatively impact future growth prospects.