Value
5.9/10data confidence 100%| Component | Sub-score |
|---|---|
| P/E | 8.1 |
| P/S | 6.7 |
| EV/EBITDA | 0.0 |
| Fwd P/E | 7.7 |
| PEG | 8.9 |
| Analyst target | 3.0 |
- ▸Forward P/E: 16.0x
- ▸PEG: 0.68
DUOL · Why this verdict
Why Duolingo (DUOL) is rated HOLD
Updated
Model-generated analysis — not investment advice. Not a registered investment advisor. Past performance does not guarantee future results.
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VerdictHOLD
Overall score5.9/10
ConfidenceMEDIUM
MacroNEUTRAL
Thesis pillars
| Pillar | Expectation | Trend |
|---|---|---|
Revenue is growing at 26% year-over-year, and the PEG ratio of 0.69 implies the market is not yet pricing in the full value of that growth relative to earnings — suggesting the stock screens attractively on a growth-adjusted basis. Growth breakdown | Revenue growth stays above 20% year-over-year for 2 consecutive quarters, confirming the current growth trajectory is durable. | →Stable |
| CounterTwo consecutive earnings misses suggest the cost structure may be expanding faster than the revenue line; if sales and marketing spend or headcount is scaling ahead of revenue, the apparent growth-at-value argument weakens. | ||
The business earns an economic moat score consistent with a wide-moat franchise, supported by 38% net margins, a Piotroski F-Score of 8 out of 9, and a Rule of 40 score of 55 — placing it among the highest-quality software operators by these measures. Quality breakdown | Net margins remain at or above 30% and the Rule of 40 score stays above 50 over the next four quarters. | →Stable |
| CounterA concentration on two distribution platforms — the Apple App Store and Google Play Store — means the company is subject to platform policy changes that could materially alter its unit economics without any operational misstep on its part. | ||
The stock is trading well above its near-term resistance target, and the risk/reward geometry is deeply unfavorable — with downside to the stop level substantially exceeding the negligible distance to the take-profit level, new buyers face a structurally poor entry point. Price targets | A pullback of at least 15% from current levels re-establishes a reward-to-risk ratio at or above 1.5, creating a technically sound entry. | →Stable |
| CounterStrong momentum (MACD improving, rising OBV, RSI at 73 in a recovery setup) can carry a stock above resistance for extended periods; the unfavorable geometry at the current price may resolve through time and target revision rather than a price pullback. | ||
After two large beats in the prior two quarters, the company has now missed earnings estimates in each of the two most recent quarters — signaling that the earlier beat rate may not be repeatable and that near-term earnings visibility has deteriorated. Earnings | The company returns to beating consensus estimates in the next reported quarter, restoring confidence in earnings predictability. | →Stable |
| CounterThe Q3 2025 result included a very large one-time item that inflated the beat substantially; stripping that out, the underlying beat/miss pattern may look less alarming than the raw four-quarter history suggests. | ||
Revenue is growing at 26% year-over-year, and the PEG ratio of 0.69 implies the market is not yet pricing in the full value of that growth relative to earnings — suggesting the stock screens attractively on a growth-adjusted basis.
→StableGrowth breakdown
- Expectation
- Revenue growth stays above 20% year-over-year for 2 consecutive quarters, confirming the current growth trajectory is durable.
CounterTwo consecutive earnings misses suggest the cost structure may be expanding faster than the revenue line; if sales and marketing spend or headcount is scaling ahead of revenue, the apparent growth-at-value argument weakens.
The business earns an economic moat score consistent with a wide-moat franchise, supported by 38% net margins, a Piotroski F-Score of 8 out of 9, and a Rule of 40 score of 55 — placing it among the highest-quality software operators by these measures.
→StableQuality breakdown
- Expectation
- Net margins remain at or above 30% and the Rule of 40 score stays above 50 over the next four quarters.
CounterA concentration on two distribution platforms — the Apple App Store and Google Play Store — means the company is subject to platform policy changes that could materially alter its unit economics without any operational misstep on its part.
The stock is trading well above its near-term resistance target, and the risk/reward geometry is deeply unfavorable — with downside to the stop level substantially exceeding the negligible distance to the take-profit level, new buyers face a structurally poor entry point.
→StablePrice targets
- Expectation
- A pullback of at least 15% from current levels re-establishes a reward-to-risk ratio at or above 1.5, creating a technically sound entry.
CounterStrong momentum (MACD improving, rising OBV, RSI at 73 in a recovery setup) can carry a stock above resistance for extended periods; the unfavorable geometry at the current price may resolve through time and target revision rather than a price pullback.
After two large beats in the prior two quarters, the company has now missed earnings estimates in each of the two most recent quarters — signaling that the earlier beat rate may not be repeatable and that near-term earnings visibility has deteriorated.
→StableEarnings
- Expectation
- The company returns to beating consensus estimates in the next reported quarter, restoring confidence in earnings predictability.
CounterThe Q3 2025 result included a very large one-time item that inflated the beat substantially; stripping that out, the underlying beat/miss pattern may look less alarming than the raw four-quarter history suggests.
TrendMatrix Research · core thesis
Engine thesis — one sentence
Duolingo is a high-quality, wide-moat software business growing revenue at 26% year-over-year with an excellent Piotroski score, but the stock has moved well past its near-term resistance target, the risk/reward is deeply unfavorable, and two recent earnings misses have interrupted what had been an exceptional beat record — the fundamental case is strong but the current entry point is not.
Falsifiable statement — pillar-level invalidators below. Engine-derived; not personalized advice.
Per-dimension breakdown
Quality
8.0/10data confidence 100%| Component | Sub-score |
|---|---|
| ROE | 10.0 |
| ROA | 3.9 |
| Gross margin | 10.0 |
| Op margin | 6.1 |
| Net margin | 10.0 |
| Current ratio | 8.9 |
| FCF quality | 5.6 |
| Moat | 7.5 |
| Rule of 40 | 8.9 |
| Piotroski F | 8.9 |
- ▸Excellent ROE: 37%
- ▸Strong margins: 38%
- ▸Earnings quality warning: 74% FCF/NI
- ▸Wide economic moat
Growth
7.9/10data confidence 67%| Component | Sub-score |
|---|---|
| Rev growth | 9.1 |
| EPS growth | 6.7 |
- ▸Strong growth: 26% YoY
Momentum
4.8/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 4.5 |
| MACD | 0.0 |
| OBV | 10.0 |
| MA position | 6.0 |
| Volume | 3.7 |
- ▸Volume accumulation (rising OBV)
- ▸Below 200-MA, MA slope -15.4%/30d — confirmed downtrend
Sentiment
3.8/10data confidence 100%| Component | Sub-score |
|---|---|
| LLM sentiment | 3.5 |
| Analyst rating | 5.0 |
| Price target | 2.5 |
- ▸Below analyst target
Insider
5.1/10data confidence 50%| Component | Sub-score |
|---|---|
| materiality | 5.0 |
| holder change | 5.2 |
- ▸Insider selling (low materiality) — $1,073,854 (0.018% of mkt cap)
Peer rank
5.9/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 5.2 |
| quality rank | 8.9 |
| growth rank | 7.9 |
- ▸Superior ROE vs peers
- ▸Best-in-class margins
Technical
2.7/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 2.1 |
| support resistance | 2.6 |
| 52w position | 0.0 |
| gap | 6.0 |
Risk (lower is worse)
4.4/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 9.3 |
| days to cover | 5.0 |
| volatility | 0.0 |
| put call | 7.5 |
| implied vol | 1.0 |
| beta | 7.7 |
| debt equity | 0.0 |
- ▸Short squeeze setup: 23% short, quality 7.5
- ▸High IV: 74%
- ▸Concentration risks: 1 HIGH, 1 MED (10-K Item 1A — sized via position_sizing, validated via buy_confidence)
Catalyst
5.7/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 4.0 |
| earnings history | 3.3 |
| earnings timing | 5.0 |
| surprise avg | 10.0 |
| news activity | 6.0 |
- ▸Earnings concerns: 2B/2M
How the verdict was assembled
Engine trigger
Growth is cheap relative to earnings, but the technical setup has not yet produced a breakout above resistance (PEG 0.68, quality 8.0/10, growth 7.9/10). | News modifier -1 (STRONG_BUY_WAIT → HOLD_IF_HOLDING).
Engine technical detail
verdict_path:
L4:PATH_C2_GARP_WAIT|L3:NEWS_MOD=-1Passed (7)
- MOMENTUM:4.8>=4.5
- INSIDER:OK
- 8K:CLEAN
- NEWS_EVENTS:NONE_RECENT
- EARNINGS_PROXIMITY:31d clear
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (2)
- ASYMMETRY:-1.8=NEGATIVE
- DEATH_CROSS:HARD_BLOCK
Warning (1)
- MOMENTUM:4.8<5.5 (soft — BUY_NOW allowed but watch)
Reward-to-Risk
-1.75
Upside
-26.2%
Downside
15.0%
Sizing output
AVOID
Setup— — No clear chart pattern; technical signals are mixed
EdgeNo clear edge — No clear edge identified
SuitabilitySpeculative — Drawdown -76% (>40% off 52w high)
Investment implication
The C-path quality+growth combination triggered the HOLD_IF_HOLDING verdict: quality 8.0 and growth 7.9 both clear their thresholds, with asymmetric R:R of -1.75 supporting the read.
The strongest dimensions are Quality at 8.0, Growth at 7.9, and Value at 5.9; the weakest are Technical at 2.7, Sentiment at 3.8, and Risk (lower is worse) at 4.4. The V9 engine flagged 2 failed gates with 1 warning, producing an asymmetric reward-to-risk of -1.75 and an engine sizing output of AVOID.
What would invalidate the thesis
Falsifying conditions — when triggered, the corresponding pillar's thesis is invalidated.
- P1Wide Moat High Quality Franchise
Trip ifNet margin compresses below 25% for 2 consecutive quarters.
- P2Strong Revenue Growth Profile
Trip ifRevenue growth falls below 15% year-over-year for 2 consecutive quarters.
- P3Above Target Deeply Unfavorable Setup
Trip ifPrice rises more than 20% above the current take-profit resistance level without a corresponding analyst target revision.
- P4Recent Earnings Miss Pattern
Trip ifEPS surprise stays below 0% for a third consecutive quarter.