Movement Alert|Duolingo Falls 5.32% in Regular Trading, Analyst Downgrade Cites No Visible User Growth Catalyst

Market Focus06-25

On June 25, Duolingo declined 5.32% in regular trading, trading at $126.04/share, with turnover of $39.73 million. The drop was triggered by Citizens JMP Securities downgrading the stock from Outperform to Market Perform without providing a target price, citing that it currently sees no catalyst capable of driving future user growth for the company.

This marks the latest in a series of institutional downgrades for Duolingo. Morgan Stanley trimmed its target price from $100 to $95 in May, while JPMorgan lowered its target to $92, both maintaining Neutral ratings. Earlier, Citi slashed its rating from Buy to Neutral with a target cut from $270 to $101, and Goldman Sachs reduced its target from $198 to $105. Though the company beat Q1 EPS estimates at $0.89 versus the $0.79 consensus, persistent concerns over decelerating daily active user growth and full-year bookings guidance falling short of expectations continue to weigh on the valuation. DAU growth hit a four-year low in Q4 of the prior fiscal year, and full-year bookings guidance of $1.27-1.30 billion came in well below the market's $1.39 billion expectation.

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