Why Duolingo Stock Skyrocketed Today
Key Points
Free users are flocking to Duolingo's apps.
More people are also converting into paying subscribers.
- 10 stocks we like better than Duolingo ›
Shares of Duolingo (NASDAQ:DUOL) spiked 26% on Wednesday after the popular learning app operator announced a surge in users.
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Duolingo's growth is accelerating
Duolingo's daily active users soared 29% to 64.9 million in the third quarter. That's a significant acceleration from the 23% growth the education company reported in the second quarter and 21% in the first quarter.
More people are also choosing to pay for premium features. Paid subscriber growth was moderate at 14%, but positive, nonetheless. Duolingo is being intentionally conservative in its monetization initiatives as it strives to entice more learners to become daily active users.
"This year, we're prioritizing teaching better and user growth, and we're seeing that strategy paying off," CEO Luis von Ahn said. "Our user growth in every region of the world and in every subject we teach shows that we still have an enormous opportunity ahead of us."
Yet Duolingo's monetization efforts are beginning to bear fruit. Revenue rose 14% to $309 million. Operating cash flow also increased by 6% to $89.4 million.
AI concerns appear overblown
These strong results prompted Duolingo to lift its full-year financial forecast. The company now expects revenue to rise by 18% to $1.2 billion in 2026.
Duolingo's upbeat guidance helped assuage investors' fears about artificial intelligence (AI)-driven threats and bolstered their confidence in management's long-term growth strategy.
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Joe Tenebruso has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Duolingo. The Motley Fool has a disclosure policy.
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