Prediction: Duolingo Stock Is Going to Soar After May 4

Key Points

• Duolingo stock has plummeted by 80% from its peak as investors digest a key shift in the company’s strategy.

• It plans to sacrifice some revenue and earnings growth in an attempt to nearly double the user base.

• I think this short-term pain will lead to long-term gain; we’ll learn more the company’s progress on May 4.

The ongoing geopolitical tensions between the U.S. and Iran have sparked significant stock market volatility this year, but Duolingo (NASDAQ: DUOL) has lost 80% of its peak value for a different reason.

The company operates the world’s largest digital language education platform, and management recently announced a strategy shift that involves focusing more heavily on user growth at the expense of revenue and earnings growth. Investors are also concerned that new artificial intelligence (AI)-powered translation tools will disrupt Duolingo’s business.

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The company will release its operating results for the first quarter of 2026 (ended March 31) on May 4, and I think management will attempt to ease those worries, which could spark a recovery in its stock.

Image source: Getty Images.

Faster user growth is a long-term positive

Duolingo’s revenue grew at a blistering pace of 39% last year to a record high of $1.04 billion. The bulk came from the platform’s 12.2 million users who were paying a subscription to accelerate their learning by unlocking additional features. Deliberately pulling the handbrake on the company’s incredible growth sounds crazy, so I understand why many investors are worried about management’s new strategy, but it could pay off over the long run.

The company ended 2025 with 52.7 million daily active users, which was up 30% compared to the end of 2024. Management believes shifting resources away from monetization initiatives and into user acquisition will achieve two things:

1. It will give the platform more prospects to monetize in the future through subscriptions, leading to more revenue and profit.

2. It will make the company more defensible, because a large user base acts like a moat that will protect the platform from disruption by competitors, particularly those leveraging AI.

Duolingo’s guidance suggests revenue growth slowed to 25% in the first quarter of 2026, and it could slow to somewhere between 15% and 18% during 2026 overall. According to Yahoo! Finance, Wall Street analysts are bracing for even slower growth in 2027. However, management believes the platform’s daily active user base will almost double to 100 million by the end of 2028, so the temporary pain at the top line could pay off significantly in the long run.

If Duolingo shifts its focus back to monetization in 2028 and attracts subscribers at the same rate as it did in 2025, we can assume its paying member base and revenue would also nearly double from current levels. To put it another way, when Duolingo is done fortifying its user base, its revenue growth could start accelerating once again, making the recent plunge in its stock seem completely irrational.

If management articulates this potential outcome more clearly on May 4, it would go a long way to settle investors’ nerves.

AI could be a massive tailwind for Duolingo

Personally, I don’t think AI translation tools will meaningfully disrupt Duolingo’s business, because the company’s goal is to educate. Based on its rapidly growing user base, Duolingo’s gamified and interactive lessons are clearly resonating with people who want to learn languages, and the platform is now using AI to make the experience even better.

Duolingo offers two paid subscription tiers called Super Duolingo and Duolingo Max, and both include an AI-powered feature called Video Call, which allows users to practice their foreign-language speaking skills with a digital avatar named Lily. She adapts to each user’s competency level in their language of choice and offers supportive guidance in a playful tone to foster a lighthearted learning environment.

As part of its strategy to attract more users, management intends to introduce more AI-powered speaking tools for paid subscribers and for people who use the free version of Duolingo, which could boost engagement over the long term.

Duolingo stock looks very attractive heading into May 4

Duolingo’s net income soared by 367% to $414.1 million in 2025, which translated to earnings of $8.31 per share. That places its stock at a price-to-earnings (P/E) ratio of just 12.2, which is less than half the P/E ratio of the S&P 500, so Duolingo is substantially cheaper than the market right now.

DUOL PE Ratio data by YCharts

However, if Duolingo’s earnings shrink during 2026 because of management’s strategy shift, its stock might be more expensive on a P/E basis than it appears at face value right now. Therefore, it’s also useful to value the company using the price-to-sales (P/S) ratio, which measures its market capitalization relative to its annual revenue.

Duolingo trades at a P/S ratio of 4.9 as I write this, which is near the cheapest level since it went public in 2021. Plus, since the company’s revenue is expected to grow in 2026 (albeit at a slower pace), its forward P/S ratio is just 4. If management increases its 2026 revenue forecast on May 4 — which it has consistently done in the past — then Duolingo stock would look even cheaper on a forward basis.

DUOL PS Ratio data by YCharts

All in all, I think May 4 will mark a turning point for Duolingo stock, as management responds to its 80% decline by clarifying the strategy going forward and potentially by making some adjustments to satisfy shareholders. I bought the stock myself last month and plan to hold it until at least 2028, because I felt its valuation was too good to pass up.

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Anthony Di Pizio has positions in Duolingo. The Motley Fool has positions in and recommends Duolingo. The Motley Fool has a disclosure policy.