What Happened?
Shares of language-learning app Duolingo (NASDAQ:DUOL) fell 6.9% in the morning session after JMP Securities lowered its price target on the stock, citing concerns about slowing user engagement ahead of the company's second-quarter earnings report.
The investment firm JMP Securities reduced its price target to $450 from $475, pointing to third-party data that indicated a slowdown in user engagement and platform activity since April. This sentiment echoed concerns from other analysts, as JPMorgan had also previously lowered its price target on July 17 due to slowing growth in daily active users (DAUs). Data from Sensor Tower suggested that DAU growth decelerated to approximately 39% year-over-year in the second quarter, a noticeable drop from about 51% in the first quarter. Despite the target reduction, JMP Securities maintained its 'Market Outperform' rating, suggesting it viewed any potential stock weakness as a buying opportunity ahead of Duolingo's earnings report on August 6.
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What Is The Market Telling Us
Duolingo’s shares are extremely volatile and have had 30 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 12 days ago when the stock dropped 4.2% after the stock continued its downtrend as investors weighed concerns over slowing user growth and the sustainability of its marketing-driven expansion. The language-learning app's stock has been under pressure with no specific company news released today. The negative sentiment appears to be a carryover from recent analyst commentary and bearish articles. Earlier in the month, on July 8, Morgan Stanley lowered its price target on the stock, citing a slowdown in U.S. daily active user growth following the company's "AI-First" initiative.
Duolingo is up 3.1% since the beginning of the year, but at $335.83 per share, it is still trading 37.9% 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 $2,416.
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