Duolingo (DUOL) Stock Forecast & Price Target

Duolingo Inc. reported an impressive adjusted EBITDA of $80.0 million, reflecting a year-over-year increase of $32.5 million, driven by strong revenue performance that exceeded estimates. The company also experienced robust growth in paid subscriptions, reaching 11.5 million, surpassing consensus expectations, alongside a significant 41% year-over-year revenue growth. Additionally, daily active users (DAUs) continued to increase, with a notable 30% year-over-year rise, underscoring Duolingo’s strong market engagement and potential for continued subscriber growth in the upcoming quarter.

Duolingo Inc. is experiencing a decline in key financial metrics, with gross margins decreasing from 72.9% to 72.5% year-over-year, suggesting potential issues with subscriber penetration rates. The company's guidance for 4Q25 indicates lower-than-expected bookings and adjusted EBITDA, with forecasts ranging below consensus expectations, highlighting challenges in revenue generation. Additionally, heightened generative AI and hosting costs, combined with potential headwinds related to discretionary consumer spending, contribute to a more cautious outlook on future growth.