Anthony Di Pizio, The Motley Fool
5 min read
Duolingo (NASDAQ: DUOL) operates the world’s largest digital language education platform. Its mobile-first approach places fun, highly interactive lessons at the fingertips of practically anybody with a smartphone, and making this style of education accessible has been the secret to its long-term success.
Duolingo plummeted to a 52-week low of $90.03 in April, which represented a whopping 83% decline from last year’s record high. Investors were concerned about the consequences of management’s new strategy to focus on user growth instead of monetization, and they were also worried that artificial intelligence (AI) could disrupt its business.
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However, Duolingo has put those concerns to rest by posting strong operating results, particularly in the recent third quarter (ended Sept. 30). Its stock has now soared by 83% from its 52-week low (as of the market close on Nov. 4), and here’s why I predict the recovery will continue in 2027.
Management’s strategy is bearing fruit
Duolingo makes money in two ways. It sells subscriptions to users who want to accelerate their learning by unlocking extra features, and it shows advertisements to free users. Paying members make up the bulk of the company’s revenue, so investors were understandably worried when management decided to focus more on growing the overall user base, rather than converting free members into subscribers.
Historically, Duolingo has spent very little money on marketing because its widespread, organic social media presence has been enough to attract new users. However, the company grew its marketing spending by 20% during the third quarter, so management is now leaning into paid channels to accomplish its goals.
Moreover, Duolingo continues to make product changes geared toward attracting and retaining free users. For example, the proportion of voice-based speaking exercises on the platform have doubled since the start of 2026. These are typically more popular than tap-based or written exercises because they help users learn more quickly.
Speaking exercises were previously only available to paying subscribers through features like Video Call, but the declining cost of AI is enabling the company to roll them out more broadly. Therefore, Duolingo is proving it can use AI to its advantage, contrary to the opinion of some analysts over the past year.
