Core Viewpoint - Johnson Fistel, PLLP is investigating potential claims on behalf of investors of Duolingo, Inc. following a significant decline in the company's stock price after the announcement of disappointing financial results and forward-looking guidance [1][3]. Group 1: Investigation Details - The investigation focuses on whether Duolingo's executive officers complied with federal securities laws, particularly in light of the company's recent disclosures regarding slower bookings growth and reduced profitability [3][4]. - Duolingo announced its financial results for Q4 and the full fiscal year ended December 31, 2025, on February 26, 2026, which led to a significant decline in its common stock during after-hours trading [3]. Group 2: Company Background - Johnson Fistel, PLLP is a nationally recognized shareholder-rights law firm with a strong track record in representing investors in securities class action lawsuits [5]. - The firm has been recognized as one of the Top 10 Plaintiff Law Firms in 2024, having recovered approximately $90.725 million for clients in cases where it served as lead or co-lead counsel [6].

Core Insights - Duolingo, Inc. (DUOL) experienced a significant decline from its peak in May 2025, which can be divided into two phases, with the first phase leading up to Q3 2025 earnings and a substantial reset in bookings [1] Group 1: Company Performance - The decline in Duolingo's stock price reflects a broader trend in the company's financial performance, particularly influenced by the earnings report and updated guidance [1] Group 2: Market Trends - The analysis indicates that the market's reaction to Duolingo's earnings and guidance has been critical in shaping investor sentiment and stock valuation [1]

Core Viewpoint - Duolingo's stock price has shown signs of recovery, rising by 5% to $185, but remains significantly below its all-time high, with analysts expressing optimism about its future growth potential [1][2]. Group 1: Stock Performance and Analyst Sentiment - Duolingo's share price fell dramatically last year, leading to a market capitalization drop from over $24 billion to approximately $8.54 billion [2]. - Analysts from Bank of America upgraded Duolingo's rating from neutral to buy, indicating a belief that the stock is undervalued and poised for a rebound [2][4]. - The consensus estimate for Duolingo's stock price among analysts is $314, with individual targets ranging from $220 to $330 from various firms [4]. Group 2: Business Growth and Financial Performance - Duolingo reported over 11.5 million paid subscribers, reflecting a 34% increase year-over-year [5]. - The company's revenue increased by 41% to $271 million, and net income rose over 100% to $292 million, largely due to the release of a valuation allowance against deferred tax assets [6]. - Despite strong financial numbers, Duolingo's results fell short of analysts' expectations, and its growth guidance indicated a slowdown, with projected annual revenue growth decreasing from 37% to 22.42% [7]. Group 3: Technical Analysis - The stock has experienced a significant decline from a high of $544 to its current price of $185, remaining below all moving averages [10]. - An island reversal pattern has formed, suggesting a potential for price recovery, while a double-bottom pattern indicates a possible rebound target of $250 if it surpasses the neckline at $213 [10][11].

Core Insights - Duolingo (DUOL) was initially one of the major beneficiaries in the post-pandemic environment and the rise of AI, but its stock has recently experienced a decline, indicating ongoing pressures from the market [1] Company Analysis - The management of Duolingo has signaled that the company is facing continued pressures, which may affect its future performance [1] - The company is recognized for its strong balance sheet and management team, which are critical factors for long-term growth potential [1] Investment Strategy - The investment approach highlighted involves identifying undervalued companies with secular growth, focusing on those with strong fundamentals and long growth runways [1] - The strategy combines growth-oriented principles with strict valuation criteria to enhance the margin of safety for investors [1]

Group 1: Earnings and Revenue Forecast - Duolingo, Inc. is predicted to post quarterly earnings of $0.55 per share, reflecting a 7.8% increase year-over-year [1] - Revenues are forecasted to be $240.54 million, representing a year-over-year increase of 34.9% [1] Group 2: Analyst Revisions and Consensus Estimates - There has been a downward revision of 0.7% in the consensus EPS estimate for the quarter over the past 30 days, indicating a reappraisal by analysts [2] - Analysts' projections for 'Revenues- Subscription' are estimated at $203.58 million, a change of +41.5% from the year-ago quarter [5] - Total bookings are expected to reach $246.34 million, compared to $190.09 million in the same quarter last year [5] Group 3: User Metrics Forecast - Daily active users (DAUs) are projected to reach 48.37 million, up from 34.10 million year-over-year [5] - Monthly active users (MAUs) are estimated at 132.93 million, compared to 103.60 million in the previous year [6] - Paid subscribers at period end are forecasted to reach 10.89 million, an increase from 8.00 million in the same quarter last year [6] Group 4: Subscription Bookings - Subscription bookings are expected to arrive at $209.76 million, compared to $156.48 million in the same quarter of the previous year [7] Group 5: Stock Performance - Over the past month, Duolingo shares have recorded returns of -11.6%, while the Zacks S&P 500 composite has changed by +2.3% [7] - Based on its Zacks Rank 4 (Sell), Duolingo is expected to underperform the overall market in the upcoming period [7]