Friday was “a terrible day” for Duolingo investors, reports Fast company. But Friday’s one-day 14% decline is only part of a longer story. Since May last year, Duolingo shares have fallen 81%. Yes, the company faced a social media backlash that month after its CEO promised it would become an “AI-first” company (favoring AI over human contractors). And yes, Duolingo has doubled its language offering using generative AI. But more importantly, that summer OpenAI showed how easy it was to use your own language learning tool from a short prompt in a GPT-5 demo, while Google built an AI-powered language learning tool into its Translate app.
And yet, shares of Duolingo fell another 14% on Friday after announcing good fourth-quarter results but an unpopular direction going forward. Fast company reports:
On the surface, many of the the most critical figures of the company saw decent gains this quarter, including:
— Daily active users: 52.7 million (up 30% year over year)
— Paid subscribers: 12.2 million (up 28% year over year)
— Revenue: $282.9 million (up 35% year over year)
— Total bookings: $336.8 million (up 24% year over year)
The company also reported its full-year 2025 financials, which showed it crossed the $1 billion revenue mark for a fiscal year for the first time in its history.
But the Motley Fool explains that Duolingo is higher ad loads and repeated attempts to purchase subscriptions “Generated revenue in the short term, but made the Duolingo platform less attractive. Ergo, user growth slowed while revenue rose.” On Thursday, Duolingo announced a big change to address this, including moving more features to cheaper tiers. Barrons reports:
DA Davidson analyst Wyatt Swanson, who rates Duolingo shares at Neutral, said the drive to make money “led to dissatisfied users and a meaningful negative impact on ‘word of mouth’.” Duolingo has targeted bookings growth between 10% and 12% by 2026, compared to the 20% the company had expected to see “if we operated as we have over the past few years….” If the stock reaction is any indication, investors are concerned about Duolingo’s new focus.
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