Duolingo shares hit their lowest price since 2023. Is the sell-off overdone?Shares of Duolingo (DUOL 8.83%) plunged 23.6% lower in January 2026, according to data from S&P Global Market Intelligence. The price drop continued a downtrend that started in 2025. The stock has backed down to prices not seen since March 2023, chiefly due to slower subscriber growth in a shaky global economy.January continued the downtrend for similar reasons. The market pressure also increased when CFO Matt Skaruppa announced his ...

Duolingo, Inc. (DUOL) ended the recent trading session at $131.93, demonstrating a -1.59% change from the preceding day's closing price. The stock's change was less than the S&P 500's daily gain of 0.54%. Meanwhile, the Dow gained 1.05%, and the Nasdaq, a tech-heavy index, added 0.56%. Shares of the company have depreciated by 24.04% over the course of the past month, underperforming the Business Services sector's loss of 6.48%, and the S&P 500's gain of 0.74%.The investment community will be closely monito ...

Core Insights - The investor emphasizes a blend of hands-on experience and academic background in corporate finance, focusing on long-duration growth opportunities while balancing the portfolio with low-volatility dividend-paying stocks [1] Investment Strategy - The analysis prioritizes fundamentals, business, and strategic perspectives as the most important factors in investment decisions [1] - The investor seeks high-quality companies with reasonable valuations rather than deep discounts, indicating a preference for intrinsic value over market price [1] - The experience suggests that excessively cheap stocks may have underlying issues, advising caution against deep discounts [1] Target Companies - The focus is on high-quality names, which may include lesser-known companies with potential for exponential share price growth over the long term [1]

Core Viewpoint - Baillie Gifford continues to focus on technology and growth sectors, maintaining a global perspective despite a reduction in total assets held to $120 billion, down $15 billion from the previous quarter [1]. Holdings Overview - As of Q4 2025, Baillie Gifford holds a total of 265 companies with assets amounting to $120 billion, reflecting a decrease of $15 billion from Q3 [1]. Top Holdings - The firm remains heavily invested in global technology and consumer giants, with a notable emphasis on Latin American e-commerce platform MercadoLibre, and Nvidia leading the portfolio, indicating confidence in the long-term potential of AI infrastructure [4]. Top Buys - Significant increases in holdings include: - Axon Enterprise (AXON) with an additional investment of $860 million - Medline Inc (MDLN) with $437 million - Rocket Lab (RKLB) with $399 million - Google-A (GOOGL) with $373 million - Duolingo (DUOL) with $357 million - The firm shows strong interest in vertical technology sectors, particularly in safety technology and education [5][6]. Top Sells - The firm has reduced its positions in: - Datadog Inc (DDOG) by $1.01 billion - Cloudflare (NET) by $990 million - Shopify (SHOP) by $680 million - BioNTech SE (BNTX) by $630 million - Meta Platforms (META) by $590 million - This indicates a strategic retreat from cloud computing and vaccine-related companies, likely based on valuation and growth switching logic [7][8]. New Positions - New investments include: - Medline Inc (MDLN) with $437 million - United Therapeutics (UTHR) with $157 million - MongoDB (MDB) with $112 million - BillionToOne (BLLN) with $104 million - Silvergate Capital (SVM) with $35 million - The new positions reflect Baillie Gifford's exploration in emerging fields such as rare disease treatment and databases, showcasing a commitment to long-term tracking in technology and healthcare [9][10].

Core Insights - The podcast discusses a 25-point risk rating system developed by David Gardner to assess investment risks in stocks, moving beyond vague terms like "medium risk" to a more quantifiable approach [1][4][5]. Group 1: Risk Assessment Framework - The risk rating system consists of 25 yes or no questions, where each "no" adds a point, indicating higher risk with a higher score [5]. - The framework aims to provide clarity in risk assessment for both individual stocks and entire portfolios [5]. - The system challenges the notion that high risk equates to high reward, suggesting that lower risk stocks can sometimes yield greater returns [5]. Group 2: Company Analysis - Etsy - Etsy reported a net income of $182 million over the past 12 months and $75 million in the last quarter, indicating profitability [11]. - The company generated free cash flow of approximately $205 million in the last quarter and $635 million over the past 12 months [15]. - Etsy has over 93 million buyers and 8.5 million sellers, ensuring no single customer accounts for more than 20% of revenue [21][22]. - The company has seen a decline in active buyers and gross merchandise sales, with a net promoter score of -7, indicating questionable customer sentiment [25][26]. - Etsy's market cap is approximately $6 billion, which is below the $10 billion threshold considered less risky [56]. Group 3: Company Analysis - Duolingo - Duolingo achieved a net income of approximately $386 million over the past 12 months and has been profitable since 2023 [12]. - The company reported free cash flow of about $350 million, growing by 20% year over year [16]. - Duolingo has over 50% brand awareness in the U.S. language learning market and benefits from strong word-of-mouth marketing [20]. - The company has a market cap of around $7 billion, also below the $10 billion threshold [58]. - Duolingo's annual revenue growth has been at least 40% over the past three years, with a compound annual growth rate of 42% [30]. Group 4: Competitive Landscape - Etsy faces significant competition from larger companies like Amazon and Shopify, which have greater financial resources [44]. - Duolingo is considered a market leader with competitors like Babel and Rosetta Stone but surpasses them in user engagement and brand awareness [45]. - There are no major disruptive upstarts challenging Etsy's business model, but there are smaller alternatives [48]. - Duolingo faces potential disruption from AI technologies, particularly in language learning, but currently has no direct competition [49][50]. Group 5: Financial Metrics - Etsy's return on equity is negative due to large-scale buybacks, indicating potential management issues [41]. - Duolingo reported a return on equity of almost 40%, influenced by a one-time tax benefit, but generally shows an upward trend [42].

Core Insights - The podcast discusses a 25-point risk rating system developed by David Gardner to provide a more concrete and measurable understanding of investment risk, moving away from vague terms like "medium risk" [4][5]. Group 1: Risk Assessment Framework - The risk rating system consists of 25 yes or no questions, where each "no" adds a point, indicating higher risk with a higher score [5]. - The framework can be applied not only to individual stocks but also to entire portfolios by calculating a weighted average risk score [5]. - The discussion emphasizes that understanding risk is about studying quality and that lower-risk stocks can sometimes yield greater returns [5]. Group 2: Company Analysis - Etsy - Etsy reported a net income of $182 million over the past 12 months and $75 million in the last quarter, indicating profitability [12]. - The company had a free cash flow of approximately $205 million in the last quarter and $635 million over the past year [16]. - Etsy has over 93 million buyers and 8.5 million sellers, ensuring no single customer accounts for more than 20% of its revenue [22]. - However, Etsy's net promoter score is -7, indicating questionable customer sentiment, and it has seen a decline in active buyers and gross merchandise sales [26]. Group 3: Company Analysis - Duolingo - Duolingo achieved a net income of approximately $386 million over the past 12 months and was profitable in the last quarter, aided by a one-time tax benefit [13]. - The company reported a free cash flow of about $350 million, growing by 20% year over year [17]. - Duolingo has over 50 million daily active users, with 9.5 million being paid subscribers, indicating a diversified revenue base [25]. - The brand enjoys over 50% awareness in the U.S. language learning market, supported by strong word-of-mouth marketing [21]. Group 4: Financial Performance - Etsy did not increase its sales by 10%-40% annually in the previous three years, with only single-digit growth in 2023 and 2024 [30]. - Duolingo, on the other hand, has seen annual revenue growth of at least 40% over the past three years, with a compound annual growth rate of 42% [32]. - Etsy has more debt than cash and has issued convertible debt, raising concerns about its ability to operate independently without external funding [35]. - Duolingo has a strong balance sheet with over $1.1 billion in cash and short-term investments, indicating it can operate independently [36]. Group 5: Competitive Landscape - Etsy faces significant competition from larger companies like Amazon and Shopify, which have greater financial resources [45]. - Duolingo is considered a market leader with strong brand recognition, surpassing competitors like Babel and Rosetta Stone in user-based revenue share [46]. - While there are no true disruptors in Etsy's space, smaller alternatives exist, indicating a competitive environment [48]. - Duolingo faces potential disruption from AI technologies, although no direct competition currently exists [49]. Group 6: Stock Metrics - Etsy has a market cap of approximately $6 billion, which is below the $10 billion threshold [57]. - Duolingo's market cap is around $7 billion, also below the $10 billion mark [59]. - Etsy's beta is 0.85, indicating lower volatility compared to the market, while Duolingo's beta has fluctuated significantly, indicating higher volatility [61][62].

Core Insights - Artificial intelligence (AI) is identified as the greatest investment opportunity of the current era, with a strong emphasis on the urgent need for energy to support its growth [1][2][3] Investment Opportunity - A specific company is highlighted as a potential investment opportunity, possessing critical energy infrastructure assets that are essential for meeting the increasing energy demands of AI data centers [3][7] - This company is not a chipmaker or cloud platform but is positioned to benefit significantly from the anticipated surge in electricity demand driven by AI technologies [3][6] Energy Demand and Infrastructure - AI technologies, particularly large language models like ChatGPT, are extremely energy-intensive, with data centers consuming as much energy as small cities [2] - The company is involved in the U.S. LNG exportation sector, which is expected to grow under the current administration's energy policies [7] Financial Position - The company is noted for being debt-free and holding a substantial cash reserve, amounting to nearly one-third of its market capitalization, which positions it favorably compared to other energy firms burdened with debt [8] - It is trading at less than 7 times earnings, indicating a potentially undervalued investment opportunity in the context of its critical role in the energy sector [10] Market Trends - The company is strategically aligned with several market trends, including the AI infrastructure supercycle, the onshoring boom due to tariffs, and the surge in U.S. LNG exports [14] - There is a growing interest from hedge funds in this company, suggesting that it is gaining recognition as a valuable investment opportunity [9] Future Outlook - The influx of talent into the AI sector is expected to drive continuous innovation and advancements, reinforcing the importance of investing in AI-related companies [12] - The overall sentiment is that investing in AI is not just about financial returns but also about participating in a transformative technological revolution [15]

Summary of Earnings Call Company and Industry - **Companies Mentioned**: STX (Seagate Technology), ASML, TXN (Texas Instruments), QRVO (Qorvo) - **Industry**: Technology, specifically focusing on data storage, semiconductors, and electronics Key Points and Arguments STX (Seagate Technology) - **Earnings Performance**: - Revenue of $2.83 billion, up 22% year-over-year, compared to a previous quarter's growth of 21% and market expectations of $2.74 billion, which was approximately 18% growth [7][6] - EPS of $3.11, exceeding market expectations of $2.83; Non-GAAP gross margin at 42.2% vs. expected 40.8% [7] - **Market Commentary**: - Management described an "exceptionally strong" data center environment, expecting demand to offset typical seasonal declines [9] - Nearline capacity fully allocated through CY26, with plans to accept orders for 1H27 [12] - **Pricing Trends**: - Revenue per TB remains stable with a modest increase in $/TB expected to continue, indicating a potential shift in pricing dynamics [12] - **Growth Drivers**: - Incremental storage-server demand linked to AI workloads, with data centers remaining the core driver of growth [9] TXN (Texas Instruments) - **Earnings Performance**: - Q4 revenue of $4.423 billion, up 10.4% year-over-year, aligning with market expectations [24][26] - Q1 guidance midpoint of $4.50 billion, indicating a 2% quarter-over-quarter increase and 10.6% year-over-year growth [24] - **Market Commentary**: - Management expressed optimism about industrial recovery and data center strength, with improving orders and backlog [23] - Data center business expected to grow approximately 70% year-over-year [26] - **Pricing Trends**: - Management anticipates low single-digit price declines (~2-3%) in 2026, emphasizing the impact of annual negotiations [26] QRVO (Qorvo) - **Earnings Performance**: - Q4 revenue and EPS were better than expected, but Q1 guidance was approximately 12% below market expectations [32][35] - **Market Commentary**: - Management attributed revenue gaps to weakness in Android and planned exits from lower-margin models [35] - Concerns about the sustainability of profitability amidst declining Android sales and competition [41] - **Growth Drivers**: - Focus on transitioning to higher-quality, more durable programs, with expectations of gross margins above 50% despite revenue declines [42] ASML - **Earnings Performance**: - Stock price increased by 5% due to bookings of €13 billion, significantly exceeding expectations [45] - **Market Commentary**: - Management highlighted strong progress with customers and revenue guidance implying 4-20% year-over-year growth for 2026 [46] - **Growth Drivers**: - Continued demand in semiconductor capital expenditures, with a focus on high-volume manufacturing tools [46] Additional Important Insights - **Market Sentiment**: - The overall sentiment in the technology sector appears positive, driven by strong earnings reports and optimistic guidance from key players [1][2] - **Investment Considerations**: - The discussions around pricing stability and growth in data center demand suggest potential investment opportunities in companies like STX and TXN, while QRVO faces challenges that may impact its valuation [18][22][42]

Core Insights - Artificial intelligence (AI) is identified as the greatest investment opportunity of the current era, with a strong emphasis on the urgency to invest now [1][13] - The energy demands of AI technologies are significant, with data centers consuming as much energy as small cities, leading to concerns about power grid strain and rising electricity prices [2][3] Investment Opportunity - A specific company is highlighted as a critical player in the AI energy sector, owning essential energy infrastructure assets that are poised to benefit from the increasing energy demands of AI [3][7] - This company is not a chipmaker or cloud platform but is positioned to profit from the surge in electricity demand driven by AI data centers [3][6] Market Position - The company is described as a "toll booth" operator in the AI energy boom, collecting fees from energy exports and benefiting from the onshoring trend due to tariffs [5][6] - It has a unique footprint in nuclear energy, which is crucial for America's future power strategy, and is capable of executing large-scale engineering projects across various energy sectors [7][8] Financial Health - The company is noted for being debt-free and holding a significant cash reserve, amounting to nearly one-third of its market capitalization, which positions it favorably compared to other energy firms burdened with debt [8][10] - It also has a substantial equity stake in another AI-related company, providing investors with indirect exposure to multiple growth opportunities without the associated premium [9][10] Market Sentiment - There is a growing interest from Wall Street in this company, as it is seen as undervalued and riding various market tailwinds without high valuations [8][10] - The company is trading at less than seven times earnings, making it an attractive investment option in the context of AI and energy [10][11] Future Outlook - The influx of talent into the AI sector is expected to drive rapid advancements and innovation, reinforcing the notion that investing in AI is backing the future [12][13] - The combination of AI infrastructure needs, energy demands, and the onshoring boom presents a unique investment landscape that this company is well-positioned to navigate [14]

Core Insights - The edtech market is experiencing a shift towards digital learning, particularly AI-based solutions, benefiting companies like Chegg, Inc. (CHGG) and Duolingo, Inc. (DUOL) [1] Company Overview - Chegg focuses on homework help, textbook services, and tutoring, while Duolingo operates a language-learning platform, both addressing the evolving needs of students in digital education [2] Chegg Stock Analysis - Chegg is transforming its business model with Chegg Skilling, integrating Busuu and Chegg Skills, targeting the growing global skilling market valued at over $40 billion [3] - The new segments are expected to achieve 14% year-over-year growth, reaching $70 million in annual revenues by 2025 [3] - Chegg is prioritizing cash preservation, reducing capital expenditure by 60%, with 2025 capex projected at $27 million, down from $60-$65 million in 2024 [5] - Despite these efforts, Chegg faces challenges from traffic losses due to AI tools and changes in Google search, leading to subscriber attrition and weaker advertising demand [6] Duolingo Stock Analysis - Duolingo is benefiting from increased user engagement, with daily active users (DAUs) growing by 35.8% to 50.5 million and monthly active users (MAUs) increasing by 19.6% to 135.3 million year-over-year [7] - The expansion of Duolingo Max is contributing to subscriber growth, although its adoption is slower than anticipated [7] - Duolingo is diversifying its offerings beyond language learning, with chess usage surpassing math and music on iOS, indicating potential for market expansion [9] - However, user growth moderation in the U.S. and underperformance of Duolingo Max raise concerns about future monetization [10][11] Stock Performance & Valuation - Over the past six months, Chegg's stock performance has been above Duolingo's, despite both showing a declining trend [12] - Duolingo has historically traded at a premium valuation compared to Chegg, which currently trades at a discount [13][14] - Chegg's earnings estimate for 2026 indicates a 221.4% year-over-year growth, while Duolingo's estimate shows a decline of 51.6% [17][18] Investment Outlook - Chegg is undergoing a strategic reset towards the skilling market, with a discounted valuation and stable earnings estimates suggesting potential for a contained downside [20] - Duolingo, while showing strong engagement metrics, faces execution risks due to moderating user growth and a premium valuation [21] - It is suggested that investors may favor Chegg stock over Duolingo stock at this time due to the higher-risk turnaround potential and valuation support [22]