What Happened?
Shares of language-learning app Duolingo (NASDAQ: DUOL) fell 2.8% in the afternoon session after reports revealed Apple's new AirPods will be able to translate conversations in real time, introducing a significant competitive threat.
The news created volatility for the language-learning app's stock, as a built-in translation feature from a tech giant like Apple could challenge Duolingo's market position. This latest drop adds to a difficult period for the company, which has seen its stock slide significantly over the past three months. Despite the market's negative reaction to the potential competition, some analysts remain positive. For instance, KeyBanc Capital Markets recently reiterated its Overweight rating on the stock ahead of the company's upcoming Duocon event, viewing it as a potential positive catalyst for investor sentiment.
The shares closed the day at $307.91, down 0.5% from previous close.
The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks. Is now the time to buy Duolingo? Access our full analysis report here, it’s free.
What Is The Market Telling Us
Duolingo’s shares are extremely volatile and have had 37 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The previous big move we wrote about was 1 day ago when the stock gained 8.6% after a positive analyst note highlighted a strategy that could significantly boost future profits.
Citizens JMP maintained its Market Outperform rating and $500 price target, pointing out that Duolingo's push to direct new subscribers to its web platform instead of app stores could increase its 2027 EBITDA by approximately 10%. By bypassing Apple's estimated 20% take rate for a much lower 3% processing fee from services like Stripe, the company stands to make significant savings. This optimistic analysis is supported by the company's strong financial health, including a 41.5% year-over-year revenue increase in its last reported quarter. Other analysts have also recently expressed confidence, with JPMorgan and Morgan Stanley maintaining Overweight ratings due to advancements in AI and monetization.
Duolingo is down 5.5% since the beginning of the year, and at $307.98 per share, it is trading 43% below its 52-week high of $540.68 from May 2025. Investors who bought $1,000 worth of Duolingo’s shares at the IPO in July 2021 would now be looking at an investment worth $2,216.
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