Two years ago, I predicted that the rapid rise and extreme success of free language learning app Duolingo would mark a death knell for rival, CD-ROM-based language instructor Rosetta Stone (NYSE: RST). So how has that worked out?
I'm afraid you're going to have to score me 1-for-2 on that prediction -- no better than a coin flip.
In my defense, the numbers all seemed to be heading in just one direction. After growing five times in size in its first four years in business, Rosetta Stone's sales growth slowed in 2011, stalled in 2012, and shifted into reverse thereafter. By 2010, the company had stopped earning money (it hasn't earned a penny in profit since). As Duolingo grew its user base past 200 million between 2012 and 2018, Rosetta's sales slumped 36%, according to data from S&P Global market Intelligence.