The Duolingo Dance: A Growth Stock Waltzing to Its Own Beat
Let’s talk about Duolingo (DUOL), a growth stock that’s been doing the cha-cha on the dance floor of the stock market. It’s been shimmying in a consolidation pattern with a buy point of 168.40, and recently, it’s been doing a little salsa with the 50-day line.
The Year of Growth
This year, DUOL has been the belle of the ball, twirling up over 120% from its December debut at 71.13. It’s been doing a quickstep up the right side of the cup, with a four-day winning streak and increasing volume to the beat of the market.
The Aggressive Entry
Now, let’s not get carried away with the dance metaphors. There’s an aggressive entry for the stock around 144, which is like trying to cut in on a tango. It’s risky, but it could pay off.
The Ratings Dance
The Composite Rating is a respectable 88, while the RS Rating is doing a high-kick at 95. The EPS Rating, however, is doing a slow waltz at 56. Sales growth has been steady, like a well-choreographed foxtrot, ranging between 40% and 51% over the past eight quarters. The company is yet to turn a profit, but it’s not for lack of trying.
The User Growth Waltz
During the last quarter, monthly average users grew 47% to 72.6 million, while daily active users showed a more impressive 62% growth to 20.3 million from a year ago. Paid subscribers also spiked 63% to 4.8 million. The company expects current-quarter revenue of $122 million to $125 million. For the year, the company gave a revenue guidance of $500 million to $509 million.
The Earnings Beat
Second-quarter earnings are due on Aug. 8. Analysts at S&P Capital IQ see a loss of 19 cents per share, but a solid 40% sales growth to $123.81 million for the quarter.
The Duolingo Story
In the computer software-education and media group, Duolingo ranks No. 2, which is like being the second-best dancer in a room full of Fred Astaires. The company launched in 2012 and went public in 2021, during the depths of the pandemic. It offers a mobile learning platform for languages, with 40 languages on offer.
The AI Partnership
In March, the company partnered with ChatGPT to offer generative AI tools to its language learners through Duolingo Max. This is like adding a new dance move to their repertoire, and it’s one that could really make them stand out on the dance floor.
The Mutual Fund Interest
More mutual funds have been buying the stock over the past three quarters. Invesco Discovery Fund (OPOCX) and Lord Abbett Dev Growth Fund (LAGWX) hold shares of Duolingo. Exchange traded funds hold the stock too. Vanguard Small Cap ETF ( VB ) and iShares Russell 2000 Growth ETF ( IWO ) have positions in the language learning app maker.
