Language-learning specialist Duolingo (NASDAQ: DUOL) is a stock that investors should consider buying at its current discounted price, according to an article published by The Motley Fool. The stock is down 22% from its all-time high reached in December, presenting a buying opportunity for long-term investors. The article suggests that Duolingo has the potential for significant growth and compares it to successful companies like Amazon and Netflix in their early stages.
Duolingo is known for its expertise in language training but has broader ambitions. The company already offers courses in math and music, and CEO Luis von Ahn envisions applying the same approach to many more subjects in the future. By incorporating gamification mechanics into new subjects, Duolingo aims to attract more users and generate additional revenue through premium service subscriptions.
The article points out that Duolingo already utilizes artificial intelligence (AI) in various ways. Its premium subscription level, Duolingo Max, employs OpenAI’s ChatGPT for lesson feedback and casual conversation features. The author anticipates that Duolingo will continue to leverage AI to enhance its educational offerings and drive further growth.
While the company will focus on language learning for now, Duolingo plans to expand into other subjects as it gains more traction. Duolingo’s language-learning platform serves as a solid foundation for its larger ambitions. The language learning market was valued at $40 billion in 2022 and is projected to have a compound annual growth rate of 10.6% between 2023 and 2028. Despite its small revenue share compared to the size of the market, Duolingo’s annual revenues have been growing rapidly.
In terms of valuation, Duolingo’s stock may appear expensive at 17 times sales and 71 times free cash flows. However, the article draws comparisons to early-stage investments in Netflix and Amazon, which were also considered expensive but rewarded early investors handsomely.
The article concludes by highlighting that Duolingo is not included in The Motley Fool’s list of 10 best stocks for investors to buy now, but the author believes it is a no-brainer buy due to its growth potential, solid financials, and ambitious vision.
Note: The article has been generated by OpenAI and adheres to the provided guidelines.
