Disruptors or Disrupted? Duolingo
FLASH NOTE
There’s been a lot of chatter and discussion about both Duolingo and Figma in the past few months. It seems everyone has a strong opinion on businesses they’ve never bought anything from.
But what makes us qualified to comment on them?
Let’s start with Duolingo
April 2022: Post-IPO Hated
We first wrote on Duolingo in April of 2022. The stock was incredibly hated at the time, just a few months after its IPO.
But Philo HQ had a different view. The post is now released from paywall, read it here.
May 2025: Pumper’s Paradise
The stock does a 6X in the span of 3 years. Pumpers and other animals started to take note — X was going crazy about Duolingo.
The stock had gone from hated to extremely loved. And that usually comes with a higher valuation…
Remember, even optionality lies on a spectrum…
Optionality is NOT binary. Optionality has price.
With the above, I tried to explain that just because Duolingo can grow massively does not mean it’s an opportunity at any price.
July 2025: Past the Peak
We published our second piece on Duolingo and warned of the shift in optionality resulting from the higher valuation.
With paid subs up 4X since FY2021 but with a sales multiple on the stock still at similar (very high) level — optionality is definitely lower than it was.
We remained bullish on the company for the longer term and pushed back on the AI loser narrative. Read the piece here.
The Setup Now
Now let's look into Duolingo's AI loser narrative, management's pivot from monetisation to retention, and an overstretched valuation. Together, the three drove a ~75% sell-off in Duolingo stock.
Now here’s how things stand for Duolingo currently…