Why Duolingo Stock Was Falling Friday

Core Insights - Duolingo's Q4 sales reached $209.6 million, surpassing Wall Street's expectation of$205.5 million, but the stock fell 14.6% due to concerns over earnings performance [1] - Year-over-year sales growth for Q4 was 39%, while earnings only improved by 15% to $13.9 million, resulting in earnings per share of$0.28, significantly below the expected $1.09 [3] - Full-year earnings for Duolingo were$88.6 million, marking a 450% increase year-over-year, with earnings per share of $1.79, outpacing the 41$748 million in 2024 [4] Financial Performance - Duolingo generated $274.9 million in positive free cash flow (FCF) in 2024, a growth rate of over 90$144.3 million in 2023 [4] - Management forecasts revenue of approximately $970 million for 2025, indicating a growth rate of just under 30% [5] - The current valuation stands at roughly 51.5 times trailing free cash flow, suggesting that earnings need to grow faster than sales for the stock to be considered a bargain [5]