2024-04-01 14:01:28 ET
Summary
- Duolingo's stock climbed 18% since my previous "sell" rating. I'm upgrading it to "buy" as the company is expected to produce outsized growth in revenue and profitability in FY24.
- Duolingo continued to drive product innovation, which led to higher engagement, conversion and monetization of its users, while improving margins from 4.2% in FY22 to 17.6% in FY23.
- Despite concerns about a global macroeconomic slowdown, Duolingo's strong execution and focus on innovation should drive an upside of 24%, making it a "buy".
Introduction & Investment Thesis
I initiated a “Sell” rating on Duolingo ( DUOL ) on January 30th. My “sell” thesis was predicated on my belief that the stock was fully priced for future growth prospects. While the stock price initially declined approximately 10% after my “sell” thesis, it found support at the $170 price level, and since then, it is up close to 18%....
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Duolingo: Rating Upgrade As Accelerated Innovation Will Produce Outsized Revenue And Margin Growth