Duolingo (NASDAQ:DUOL) Shares Gap Up – Time to Buy?

Duolingo, Inc. (NASDAQ:DUOL)’s share price gapped up prior to trading on Tuesday . The stock had previously closed at $148.36, but opened at $159.01. Duolingo shares last traded at $156.2350, with a volume of 618,563 shares traded.

Key Headlines Impacting Duolingo

Here are the key news stories impacting Duolingo this week:

• Positive Sentiment: Analyst upgrade provided the main recent catalyst. Evercore ISI upgraded Duolingo to Outperform from In Line and raised its price target to $210 from $105, implying roughly 42% upside from the prior close. The firm said Duolingo is withstanding competition from generative artificial intelligence tools and continues to demonstrate strong business momentum. Evercore analyst upgrade
• Positive Sentiment: China partnership could expand Duolingo’s reach. The company reportedly partnered with Eggy Party, a popular game in China, potentially supporting user growth and engagement in an important international market. Duolingo partners with Eggy Party in China
• Neutral Sentiment: Management will appear at Citi’s Global TMT Conference. CEO and co-founder Luis von Ahn is scheduled for a fireside chat on September 9. The event may provide updated commentary on growth, artificial intelligence, international expansion and the company’s outlook, but no new financial information was announced. Citi Global TMT Conference announcement
• Negative Sentiment: Technical warnings may be encouraging caution. Following a rally of roughly 77% from this year’s low, analysts noted that the chart resembles a potential transition from high-growth to value-style performance. That backdrop can increase volatility and prompt investors to lock in gains. Duolingo technical analysis
• Negative Sentiment: U.S. restrictions affected the Duolingo English Test in Iran. The reported blocking of the test as part of broader economic measures represents a small but negative headwind for international availability and potential revenue. Duolingo English Test blocked in Iran

Analyst Ratings Changes

A number of analysts have recently weighed in on the stock. KeyCorp upgraded shares of Duolingo from a “hold” rating to an “overweight” rating in a report on Tuesday, August 18th. Truist Financial upped their price target on Duolingo from $100.00 to $120.00 and gave the company a “hold” rating in a research report on Thursday, August 6th. Needham & Company LLC reiterated a “buy” rating and issued a $145.00 price objective on shares of Duolingo in a report on Thursday, August 6th. Susquehanna began coverage on Duolingo in a report on Tuesday, August 18th. They issued a “positive” rating for the company. Finally, Morgan Stanley lifted their price objective on Duolingo from $95.00 to $125.00 and gave the stock an “equal weight” rating in a research report on Thursday, July 16th. One investment analyst has rated the stock with a Strong Buy rating, eight have issued a Buy rating, fifteen have assigned a Hold rating and one has given a Sell rating to the company. According to data from MarketBeat.com, the stock currently has a consensus rating of “Hold” and a consensus target price of $133.53.

Duolingo Stock Down 0.6%

The company has a quick ratio of 2.72, a current ratio of 2.72 and a debt-to-equity ratio of 0.06. The company’s fifty day simple moving average is $133.82 and its 200 day simple moving average is $116.26. The firm has a market capitalization of $7.39 billion, a PE ratio of 18.70, a price-to-earnings-growth ratio of 1.30 and a beta of 0.89.

Duolingo (NASDAQ:DUOL) last posted its earnings results on Wednesday, August 5th. The company reported $0.66 earnings per share for the quarter, topping analysts’ consensus estimates of $0.60 by $0.06. The firm had revenue of $298.45 million for the quarter, compared to the consensus estimate of $295.58 million. Duolingo had a return on equity of 12.10% and a net margin of 35.88%.The business’s revenue for the quarter was up 18.3% on a year-over-year basis. During the same quarter in the prior year, the business earned $0.91 EPS. Analysts anticipate that Duolingo, Inc. will post 2.62 earnings per share for the current fiscal year.

Insiders Place Their Bets

In other Duolingo news, General Counsel Stephen C. Chen sold 1,024 shares of the firm’s stock in a transaction on Monday, August 17th. The stock was sold at an average price of $129.13, for a total transaction of $132,229.12. Following the completion of the transaction, the general counsel owned 51,841 shares of the company’s stock, valued at approximately $6,694,228.33. This trade represents a 1.94% decrease in their ownership of the stock. The sale was disclosed in a filing with the SEC, which can be accessed through this link. The sale was made to cover tax withholding obligations related to the vesting of equity awards. Also, insider Robert Meese sold 1,354 shares of the stock in a transaction dated Monday, August 17th. The stock was sold at an average price of $129.13, for a total transaction of $174,842.02. Following the completion of the transaction, the insider owned 169,391 shares of the company’s stock, valued at approximately $21,873,459.83. The trade was a 0.79% decrease in their ownership of the stock. The SEC filing for this sale provides additional information. The sale was made to cover tax withholding obligations related to the vesting of equity awards. Over the last 90 days, insiders sold 6,668 shares of company stock worth $874,382. 16.62% of the stock is owned by corporate insiders.

Institutional Trading of Duolingo

A number of hedge funds have recently made changes to their positions in the stock. Lingotto Investment Management LLP boosted its holdings in Duolingo by 34.3% in the fourth quarter. Lingotto Investment Management LLP now owns 33,563 shares of the company’s stock worth $5,890,000 after acquiring an additional 8,563 shares in the last quarter. Landscape Capital Management L.L.C. bought a new position in shares of Duolingo during the fourth quarter valued at $3,752,000. Investment House LLC raised its position in shares of Duolingo by 250.7% in the 4th quarter. Investment House LLC now owns 18,038 shares of the company’s stock worth $3,166,000 after purchasing an additional 12,894 shares during the last quarter. Leonteq Securities AG purchased a new position in shares of Duolingo in the 4th quarter worth about $1,682,000. Finally, Amundi boosted its stake in Duolingo by 1,351.7% in the 1st quarter. Amundi now owns 449,068 shares of the company’s stock worth $44,265,000 after purchasing an additional 418,134 shares in the last quarter. 91.59% of the stock is owned by institutional investors.

About Duolingo

Duolingo, Inc (NASDAQ:DUOL) is a technology-driven education company that operates a widely used language-learning platform. Founded in 2011 by Luis von Ahn and Severin Hacker, Duolingo offers a freemium service featuring bite-sized lessons, gamified exercises and adaptive learning algorithms. The company’s core product is its mobile and web application, which supports instruction in more than 40 languages, ranging from widely spoken tongues such as English and Spanish to lesser-taught options including Irish and Swahili.

In addition to its flagship language courses, Duolingo has expanded its product suite to include the Duolingo English Test, an on-demand, computer-based English proficiency exam designed for academic and professional admissions.