Duolingo Stock Up 7%. Learn Why, CEO Growth Path, Whether To Buy $DUOL

Forbes

4 days ago

Duolingo stock soared 30% Thursday, according to CNBC, as investors bid up the stock after the language-learning site beat second quarter 2025 revenue and profit expectations and raised its growth guidance for the rest of the year.
However, later that day OpenAI launched GPT-5 – which built a custom web app in just three minutes that taught its user French -- causing Duolingo's shares to reverse course.
Investors feared GPT-5 could slow the company's growth, noted Yahoo! Finance. By August 8, the company's shares were up a modest 7% since the day before the earnings announcement.
Is this an opportunity to buy Duolingo's stock? The shares could rise if Duolingo executes a strategy to sustain the company's revenue growth at at 30% or higher rate for the next five years.
Such a strategy would include the following elements:
These changes could be implemented with some changes to Duolingo's culture of fun, free, and data-driven learning. Specifically, the company may need to require customers to pay for services and adapt its learning approach to the serve new customer groups effectively.
The company is pleased with its most recent results. 'We exceeded our own high expectations for bookings and revenue this quarter, and did it while expanding profitability,' said Duolingo co-founder and CEO Luis von Ahn in a release.
I have requested comment from Duolingo and will update this post if I receive a response.
Duolingo's Boffo Second Quarter Performance And Prospects
Duolingo exceeded investor expectations in the second quarter, raised its full-year guidance and issued a strong third-quarter forecast as the company benefited from AI-fueled growth.
Here are the key numbers:
Duoling stock rose in the wake of increased guidance due to 'strong user growth driven by artificial intelligence,' according to CNBC.
Duolingo achieved this growth by providing some paying subscribers with an AI-powered video-call conversation practice feature. The learning platform expanded into new courses – such as chess and acquired music gaming startup NextBeat to broaden its app product.
The good news for investors was shattered Thursday when GPT-5 was unveiled. OpenAI presented a customer web app in three minutes that taught users French – which has the potential to cost Duolingo market share, Yahoo! Finance reported.
Of course, it is also possible Duolingo could use GPT-5 and other AI tools to introduce new features that would engage users.
Why Duolingo Stock Went Up And Down
Duolingo's stock went up because the company beat expectations and raised guidance. The company's expectations-beating guidance was the result of growth in the number users and their engagement.
Users are willing to pay for conversational practice which traditional language learnings tools do not provide. Duolingo Max with GPT-4 drove more users to pay because the company's Lily service provides human like interactions – satisfying a significant unmet user need, Quartz reported.
While GPT-5 has the potential to further enhance the value to users of Duolingo's services, some investors feared such AI 'could enable new competitors or substitutes for Duolingo's app, threatening its long-term growth,' reported investing.com.
Morgan Stanley suggested these investor worries ignored Duolingo's competitive strengths and how GPT-5 could accelerate the company's growth. Market reactions "miss DUOL's competitive advantages & moat," Morgan Stanley wrote, according to investing.com.
Duolingo's moat is significant. Specifically the company may be able to sustain its lead due to 'its content quality, user engagement loop, and ability to incorporate the latest tech faster and better than upstart challengers,' according to medium.com.
Duolingo stands out as "one of the few SMID internet companies already leveraging Gen AI across its business" and AI could accelerate the company's "development flywheel, enabling persistent improvements across KPIs & deepening the moat," Morgan Stanley added.
How Duolingo Can Grow Faster Than 30%
Duolingo could potentially sustain growth at a rate or more than 30% by implementing five growth strategies:
Although Duolingo may need to adapt its culture to implement all these strategies, Von Ahn strikes me as having a very deep understanding of how to use technology to satisfy the unmet needs of learners, according to StanfordBusiness.
Where Will Duolingo Stock Go Next?
Duolingo stock could rise further. The 13 analysts who cover the company set an average price target of $501.82 – suggesting upside of 47.46%, according to TipRanks.
Rather than undermining Duolingo, the company could use GPT-5 to boost its revenue growth in the years ahead by using its knowledge of language learning and its users unmet needs to stay ahead of its rivals.