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Duolingo - AI Stock Analysis

Analysis generated October 28, 2024

Duolingo, Inc. is a well-known American language learning platform. It offers a free language-learning app, a premium service called Duolingo Plus, and other language-related products and services. With a commitment to making education accessible and fun, Duolingo has grown a massive user base globally. Recently, Duolingo went public, reflecting investor confidence in its business model and future growth prospects.

Fundamental Analysis

Duolingo's revenue for the last quarter was $178 million, an increase of 6.43% compared to the previous quarter and a significant 40.59% growth compared to the same quarter last year. This positive year-over-year growth indicates a robust demand for its services and effective monetization strategies.

However, the net income for the last quarter was $24 million, which represents a 9.66% decrease compared to the previous quarter. This suggests some concerns regarding cost management. Despite this, the year-over-year net income growth of 553.72% is a strong indicator of substantial improvements in profitability.

The EBITDA for the last quarter was $21 million, up by 14.95% compared to the previous quarter and an astounding 758.62% compared to the same quarter last year. These figures indicate that Duolingo is achieving greater efficiency and profitability.

Nonetheless, the current Price-to-Earnings (P/E) ratio stands at 208.29, which may be considered high, potentially indicating overvaluation and a bearish outlook. Moreover, insider selling in the last couple of months might reflect a lack of confidence among some insiders, serving as a cautionary signal.

Technical Analysis

Duolingo's stock price today is $292.89, marking an increase of 5.34% compared to a month ago, which indicates a positive short-term trend. Furthermore, the stock has increased by 104.01% over the past year, reflecting a strong long-term bullish trend.

The current Simple Moving Average (SMA10) is $287.07, higher than the previous SMA10 of $286.39, suggesting a potential upward trend in price movement.

On the other hand, the Relative Strength Index (RSI) is 97, which indicates that the stock is potentially overbought, posing a bearish condition.

Alternative Data Analysis

The number of job postings at Duolingo has risen to 77, a 17% increase in the past couple of months, indicating that the company is looking to grow and expand, which is a positive sign. However, the business outlook is down by 6% in the last couple of months, which could be a worrisome trend.

Duolingo's customer acquisition and engagement metrics are strong. The company has an estimated 81 million website visitors, up by 9% in the past couple of months, suggesting increased customer interest. Additionally, Duolingo’s mobile apps are downloaded an estimated 240,000 times daily, a 6% increase over the last couple of months.

Social media engagement is also considerable, with 3.3 million Instagram followers (up by 4%) and 910,000 Twitter followers. According to AltIndex, which uses AI to predict stock prices based on various data points, Duolingo has an AI score of 63, suggesting a buy signal.

Conclusion & Recommendation

Summarizing the data from our analysis, Duolingo presents a mix of positive and cautionary signals. The strong revenue and EBITDA growth year-over-year signal a robust business model and effective monetization strategies. However, the high P/E ratio and recent insider selling pose potential risks. Technically, the stock shows a bullish trend but is potentially overbought.

Also, alternative data indicate strong customer acquisition and engagement, although the slight dip in business outlook could be a point of concern. Given the overall analyses, the recommendation would be cautiously optimistic. While the fundamentals and alternative data are encouraging, considering the high valuation and recent insider activities, it would be prudent for investors to monitor closely for any shifts in the trends before making any substantial investment decisions.

Disclaimer: This AI stock analysis, generated by an experimental AI tool, is for informational purposes only and not financial advice. Information is based on publicly available data and may not always be accurate or current.