How Duolingo Stock Fell 23.6% in January

Core Viewpoint - Duolingo's shares have experienced a significant decline, dropping 23.6% in January 2026, reaching their lowest price since March 2023, primarily due to slower subscriber growth amid a challenging global economy [1][2]. Company Performance - The stock price has been on a downward trend since 2025, exacerbated by the announcement of CFO Matt Skaruppa's departure after six years [2][5]. - As of February 3, the stock has decreased by 67% over the past year, trading at 15.3 times trailing earnings, which is considered modest given the company's consistent revenue growth of approximately 40% year-over-year over the last six quarters [7]. - Duolingo has maintained a gross margin of 71.39% and a net profit margin of 40% over the last four quarters, indicating strong profitability [3][8]. Strategic Adjustments - In November 2025, CEO Luis von Ahn outlined a new business strategy focusing on optimizing subscriber growth and teaching quality, while still aiming for revenue and profit growth through larger investments in growth initiatives [4]. - The company reported that daily active users (DAUs) would fall slightly below previous guidance, while bookings would exceed earlier expectations, reflecting a mixed performance in a volatile macroeconomic environment [6]. Investment Outlook - The current stock price presents a potential buying opportunity, as it has not been this affordable since its IPO in 2021, with significant free cash flow generation of $355 million on $964 million in sales [8][10]. - The overall trend for Duolingo's e-learning platform is expected to continue growing, despite fluctuations in profitability and growth rates [9].