Duolingo (DUOL +3.05%). The name sounds cheerful, doesn’t it? Like a little bird singing about conjugating verbs. The stock, however, hasn’t been singing lately. It fell about 24% in January. And February? Another 18% gone. Thirty-eight percent down for the year so far. So it goes.
They’re due to report earnings on February 26th, after the markets close. A ritual. Like sacrificing a goat to appease the gods of quarterly revenue. Let’s look at what’s been pushing this particular bird down.
Shifting Strategies and the Illusion of Growth
They reported earnings on November 5th. Sales and profits were…fine. Better than expected, even. But the stock didn’t care. It sold off anyway. People are funny. They want numbers to go up, but they also want…something else. Something that numbers can’t provide.
The problem wasn’t the numbers themselves, but what the company said about the future. They predicted bookings of $329.5 to $335.5 million for the fourth quarter. Analysts wanted $344.1 million. A small difference, really. But enough to make people nervous. They said daily active users were slowing down. That they were changing strategies. Which is code for “We’re trying to make the numbers look good again.”
They’re going to invest more money. Always the answer. Throw money at the problem. It’s like trying to fill a bathtub with a hole in it. They want more users, but they also want to make money. A difficult balance. They may not be able to monetize users as aggressively. Which means lower profits. It’s a vicious cycle. So it goes.
The AI Panic and the SaaS Sell-Off
Software stocks have been having a rough time. People are worried about artificial intelligence. It’s a new thing, and people are always afraid of new things. They think AI is going to steal their jobs, or make their software obsolete. Maybe it will. Maybe it won’t. It’s hard to say. The future is always uncertain.
Duolingo is trying to use AI, of course. Everyone is. But there’s a fear that chatbots and other AI services could eat into their growth. It’s a valid concern. There’s only so much attention in the world. And people have a limited capacity for learning languages, even with the help of robots.
They’ll need to invest even more to keep up with the pace of innovation. Which means lower profits. The stock trades at about 14 times this year’s earnings. Which sounds cheap, but…well, things could get worse. Costs are rising. Profits may fall. It’s a simple equation, really. So it goes.
The market is a strange and unpredictable beast. It rewards growth, but it also punishes risk. And in the end, all investments are a gamble. A roll of the dice. A prayer to the gods of fortune. And sometimes, you win. And sometimes, you lose. It’s just the way things are.
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2026-02-25 16:33