BusinessOct 12, 2022
Duolingo stock: How Duo captured the attention of students, social media and investors
Edtech Gamification
Victor Lei
Discover
You may have come across Duo on social media. The green owl is the mascot of the language-learning app Duolingo (NASDAQ:DUOL).
Duolingo has nearly 50M monthly active users with over 3.3M paying customers. Their stock is also far outperforming benchmark indices. In 2022, is down 7% while the Nasdaq is down 34%.
Duolingo is an outlier in the edtech sector, where online course providers like 2U and Coursera have lost over half their value this year.
Duo differentiated itself with a focus on building a great app that keeps users engaged — one that offers:
How much do they care about the experience? Their first acquisition was a small animation studio, Gunner — announced last week.
1/ Losing money, but less than many other tech stocks. In the recent quarter, Duo lost $15M on $88.4M of sales. They’re also in a strong financial position with $591M in cash — which hasn’t changed much since they went public.
2/ Duolingo is good at getting customers to pay. From 2020 to 2022, the number of paid subscribers as a percentage of total users doubled from 3.6% to 7.2%.
3/ CEO has a habit to “underpromise and overdeliver.” Since going public in 2021, they’ve beaten expectations each quarter, even in the current market condition.
4/ Growth potential in China, a strong market of English learners — which only made up 2% of its monthly users. In June, Duolingo finally regained its app listing in China after disappearing for a year.
Duolingo reported a 300% increase in new users at the start of COVID. Are users sticking around? So far, yes.
Is language-learning another consumer fad destined to fade? Or will a strong team, product and corporate culture win out?
