TLDR
- KeyBanc upgraded Duolingo from Sector Weight to Overweight with a $460 price target
- Stock jumped 12.93% following strong Q2 earnings that beat expectations by 9%
- Revenue reached $252.3 million in Q2, driven by subscription growth and advertising gains
- Analysts raised price targets across the board, with JPMorgan setting a $515 target
- Daily active users continue growing despite minor monthly user dips
Duolingo stock soared 12.93% on Monday as KeyBanc upgraded the language learning platform to Overweight from Sector Weight. The upgrade comes with a $460 price target, reflecting growing confidence in the company’s AI-driven product improvements.
KeyBanc views recent AI concerns affecting Duolingo as just “a bump in the road” rather than a long-term threat. The firm highlighted several growth catalysts, including the Energy rollout feature, upcoming September Duocon updates, and viral marketing campaigns.
The upgrade follows impressive Q2 earnings that exceeded Wall Street expectations. Duolingo reported quarterly bookings that surpassed forecasts by 9%, while EBITDA results outperformed expectations by 29%.
Revenue for Q2 reached $252.3 million, marking strong growth from the previous year. The company’s gross margin stood at 72.1%, demonstrating healthy profitability metrics.
Foreign exchange benefits boosted performance during the quarter. Advertising revenue also contributed to the strong results, along with success from Super subscription plans.
Analyst Price Targets Rise Across the Board
Multiple financial institutions have raised their price targets for Duolingo stock. JPMorgan increased its target to $515, citing innovations in generative AI and stable daily active user trends.
DA Davidson maintained a Buy rating with a $500 price target. Morgan Stanley reiterated its Overweight rating, also setting a $500 target despite concerns about OpenAI competition.
The upgrades reflect confidence in Duolingo’s ability to integrate AI into its core learning platform. The company is weaving artificial intelligence features throughout its product offerings.
Enhanced monetization of the Max subscription tier has caught analyst attention. The premium offering shows strong uptake among users seeking advanced features.
KeyBanc’s analysis suggests price optimizations represent an “untapped growth lever” for future revenue growth. The firm sees potential for both revenue expansion and improved profitability.
Current analyst price targets range from $390 to $600. KeyBanc’s $460 target represents a 38.3x multiple on estimated 2027 EV/EBITDA.
User Growth Trends Support Optimism
Daily active user growth remains a bright spot for Duolingo’s business model. This metric continues showing positive trends despite some softness in monthly active users.
The company operates 33 language learning programs across multiple platforms. Mobile apps drive the majority of user engagement and subscription conversions.
Duolingo’s commitment to AI development has positioned it ahead of traditional competitors. The technology promises more personalized and engaging learning experiences.
Revenue forecasts for Q3 2025 have been upgraded following the strong Q2 performance. Analysts expect continued momentum from subscription growth and advertising revenue.
The expanding active user base provides a foundation for future monetization efforts. Duolingo continues finding new ways to convert free users to paid subscriptions.
KeyBanc’s forecasts for 2026 and 2027 now sit “slightly ahead of Street revenue and EBITDA” expectations. This suggests potential for continued earnings beats in coming quarters.
The stock’s 31% gain over recent weeks reflects growing investor confidence in the company’s strategic direction and financial performance.
