Duolingo is certainly a familiar app to many, but the company is also an interesting investment target. Duolingo’s core business is a gamified mobile application focused on language learning, where users complete writing, listening comprehension, and reading comprehension exercises in their chosen language. As a fun fact, the company’s CEO and co-founder is one of the founders of the well-known CAPTCHA and reCAPTCHA (which are also interesting business cases).
The app can be used for free, in which case Duolingo’s and third-party advertisements are shown to the user between exercises. With a monthly/annual fee, the app provides access to additional features, such as targeted exercises, error review, etc. Duolingo also offers level tests for educational institutions. Recently, the company has also started developing similar offerings for learning music and mathematics.
The app’s position is strong, as there are practically no equally developed competitors.
Duolingo aims to engage its users by gamifying the app in various ways, for example, with the streak familiar to Duolingo users, which is essentially just the number of consecutive practice days. Unlike many other mobile applications, regular use of Duolingo benefits both the company and the customer. A larger user base creates competitive advantages for the company, for example, in utilizing data for product development. The company’s strong growth has been largely based on word-of-mouth marketing and various campaigns.
Thanks for the thread! I’m definitely interested! To such an extent that with the new math section, I even considered applying for a job at the company in question when an interesting position was open. It didn’t get past the thinking stage, and I didn’t do anything more than change my CV’s color scheme to Duolingo’s colors.
I also owned the stock for a while. I just don’t understand what this highlighted area in the cash flow statement means. Could someone explain?
Stock-based compensation (SBC). The company adds back this item in the cash flow statement because it is a so-called non-cash item. Instead of paying the CEO more fixed salary, for example, they are given stock options. The value of this then changes depending on the stock price performance. Below is Salesforce as another example:
@_TeemuHinkula And regarding those SBC costs, it’s worth noting that they are very real costs to the owners and they MUST be taken into account, for example, when calculating free cash flow. It’s a fairly typical mistake not to account for these, and if a company pays out a lot of SBC, the figures will look artificially too good.
So, it’s always an important line to check on the cash flow statement!
I am an investor in the Tampere-based Master English and have also followed Duolingo through this. It is a success story, but the valuation is absolutely outrageous if you jump in now. For example, P/S 20 and P/E 700?
I see a much better risk-reward ratio/potential in this domestic challenger. The business is developing like a rocket, but I cannot reveal exact figures or investments. Those who are involved in this surely share my enthusiasm.
AI can be seen as a threat or an opportunity in language learning. I personally see it more as an opportunity.
Duolingo $DUOL is an excellent company, which I really like. I wrote an in-depth (3k+ word article) on this gem, completely for free. You can check it out by clicking here.
In addition, this chart is an absolute thing of beauty!
Apparently, the current P/E is about 200; so is it on sale now? I’ve personally gotten hooked on Duolingo, and it seems like the majority of my acquaintances are also Duolingo users. Based on my own observations, the growth in user numbers has been absolutely incredible over the last two years, but my circle of observation is so small that I don’t dare draw any conclusions from it. The addictiveness of the program seems incredibly good—skillfully built elements that make you use the app every day. You can’t help but think that this is a gold mine.
Could those more informed tell me what the reality is? How fast is the growth in user numbers, and how do the users generate revenue for the company?
I don’t have any investments in the US yet. Duolingo has crossed my mind often. The valuation sounds expensive, and so does the share price for a small-time investor like me. With my budget, I could only afford a couple of shares😪.
Some thoughts.
A few days ago, math and music were also added to Duolingo. I tried a couple of levels, but the first impression wasn’t great.
There are many immigrants at my workplace. Mainly from the Philippines and Africa. Almost without exception, they use Duolingo to support their Finnish language learning. Specifically Duolingo, nothing else. In fact, I don’t even know the names of the competitors’ apps.
I’m wondering how Duolingo makes money? The app is free. And if you use the free version, ads run after every completed level. If you buy Super Duolingo, you avoid the ads, and the company gets revenue from that. I wonder what the share of such users is? Maybe something would be revealed if I looked into it. Maybe.
Regardless, Duolingo is currently the market leader. And it’s smart to invest in the market leader. AI and the new opportunities it brings could turn into a threat and completely disrupt the playing field in favor of a competitor in an instant.
In our family, everyone uses the free version, which is perfectly sufficient for studying. At the point when they decide to discontinue these free versions or offer only rare trials, the business case will have to be recalculated.
I also have a streak of over 500 days in Swedish studies All other apps are so poor for language learning that this is practically the only option. Math seems to be aimed at countries where the availability of education/schooling is poor.
I recommend exploring the company’s investor relations pages and other publications, as well as the CEO’s interviews
You’re absolutely right. Information is definitely available and easily so. I just haven’t looked for it, as I don’t have the cash to buy😒
I checked the Play Store, and Duolingo is the dominant market leader, and it would be smart to invest in something like that. 500M+ downloads while the next one has 10M+ based on what I quickly browsed. Though those apps might be found elsewhere too.
It is certainly interesting as a company and as a player/student. The free version is perfectly sufficient, at least so far.
(By the way, my username is: Late Lammas, if anyone is interested or wants to be friends🙂)
Found a downside to Duolingo. I wondered why it suddenly turned into a circle like that, instead of the normal levels. I thought it was some kind of challenge or something. I kept grinding the same questions for a few weeks and then Googled what on earth was going on. Apparently, this means the course has been completed, and Duolingo has nothing more to offer…
Some people have been upset by this. Especially those who have paid real money for the service.
Oh well. There are a few options. Switch to another language. Re-do the levels already completed. Delete the progress from settings and start over.
This might not be directly related to the stock itself. Or it is, depending on how you look at it. After three “worlds,” the game is over. Someone might stop using the app because of this, as they lose motivation. There is certainly work involved in that, though. It took me about 1.5 years to complete the Swedish course. I switched to Italian now, just because. Salve, ciao e arrivederci.
(By the way, I am currently number one in the WHOLE world🙂 at the top of the Diamond League. 34 million play daily and this girl is in the lead.)
I’ve been bummed about the same thing myself though there’s still plenty to do when you make all the lessons legendary
As far as I understand, Duolingo invests the most in English language teaching since it has the largest number of users. All new features come to it first as well.
It seems those leagues are divided into quite a few divisions of the same level. Consequently, there are surely hundreds of thousands of players in first place.
Killjoy I already thought I was good at something at least. And admittedly, I was also wondering about this a lot at the same time.
No matter, I definitely recommend everyone to try this app. A word of warning: this is addictive! If a grown man plays Swedish for 15min-2h for 500 days in a row, there’s definitely something addictive about this
I don’t believe there are hundreds of thousands of players at the top of parallel Diamond Leagues, as to get there you first have to climb from one league to another for at least ten weeks, and especially being at the top of that last one requires quite a bit of no-life grinding (though it also depends on what kind of group you happen to be with). As a competitive person, I naturally had to win that league once, but I definitely never want to do it again. My girlfriend had to wait in Florence while I had to stop on some museum stairs to grind for extra points just before midnight but undoubtedly there are tens or hundreds of thousands of those parallel leagues. Perhaps there can be thousands of Diamond League leaders, but in any case, @Suppilovahvero has been playing diligently.
I didn’t even know Duolingo was publicly traded. The app is perhaps the most addictive I’ve ever used, and in an increasingly globalized world, there’s a genuine need for it. I’ll definitely look into it more closely to see if it might end up in my own portfolio.
All other apps are so poor for language learning that this is practically the only option. Math seems to be aimed at countries where the availability of education/schooling is poor.
I already thought I was good at something at least. And admittedly, I was also wondering about this a lot at the same time.
but undoubtedly there are tens or hundreds of thousands of those parallel leagues. Perhaps there can be thousands of Diamond League leaders, but in any case,