Shares plunged nearly 20% after solid Q3 results as investors questioned growth outlook and future bookings.
Duolingo faced a sharp selloff on Wall Street this week, with its shares falling almost 20% despite posting better-than-expected third-quarter earnings. The language-learning company reported $271.7 million in revenue, beating analyst expectations of $260 million, and raised its full-year forecast to a range between $1.028 and $1.032 billion.
However, investors reacted negatively to the company’s cautious outlook for Q4 bookings, projected between $329.5 and $335.5 million, below Wall Street’s estimate of $343 million. Analysts interpreted this as a sign that Duolingo’s growth momentum may be slowing.
Executives said the company plans to focus more on improving educational quality rather than aggressive revenue expansion—a long-term strategy that didn’t please short-term investors seeking faster returns.
Despite the selloff, Duolingo’s business fundamentals remain strong:
- Revenue: $271.7M
- Paid Subscribers: 11.5M (+34% YoY)
- Gross Margin: 72.5%
- Q4 Bookings Guidance: $329.5M–$335.5M
The company also highlighted progress in AI-powered learning tools designed to personalize user experience. While the market remains uncertain about the immediate revenue impact of these innovations, analysts say Duolingo’s long-term prospects in the edtech and AI integration space remain solid.
For some investors, the decline represents a natural correction after months of gains, while others see a warning that the digital education market may be entering a more competitive and mature phase.
