Duolingo, Inc. (DUOL): A Bull Case Theory

We came across a bullish thesis on Duolingo, Inc. (DUOL) on The Dutch Investor’s Substack. In this article, we will summarize the bulls’ thesis on DUOL. Duolingo, Inc. (DUOL)’s share was trading at $486.02 as of 10^th June. DUOL’s trailing and forward P/E were 245.29 and 175.44 respectively according to Yahoo Finance.

Duolingo stands out as the more compelling long-term investment relative to Spotify, thanks to its superior margins, faster growth, and underappreciated monetization potential. With over 130 million monthly active users and annual revenue growth exceeding 40%, Duolingo has emerged as the dominant force in online education, expanding beyond language into math, music, and even chess.

Despite trading at a lofty P/E ratio of 250, the company’s earnings are scaling rapidly—turning profitable in 2023 and already sporting net margins above 10%. Its high gross margin of 73% gives Duolingo significant strategic flexibility, allowing it to reinvest heavily in product development and user acquisition.

In contrast, Spotify—while a household name in music streaming—suffers from structural margin constraints due to its dependence on music labels, which limits its long-term profitability despite having a larger subscriber base. A closer financial comparison reveals that investors pay nearly the same per user for both platforms. Yet, Duolingo offers stronger unit economics and a more expansive growth runway, especially as it adds new content verticals and paid tiers.

CEO Luis von Ahn’s guidance for 20 %+ growth over the coming years supports this trajectory. While some raise concerns about Duolingo’s long-term stickiness, the company’s optionality and ability to expand into adjacent learning markets could offset user churn.

Scenario analysis suggests that even with decelerating growth and conservative margin expansion, Duolingo could deliver 10% annualized returns over the next decade, while Spotify risks stagnation at current valuations. For investors today, Duolingo offers a more attractive risk/reward profile and a clearer path to compounding value.

Previously, we highlighted Lorenzo Bastianelli’s bullish thesis on Duolingo (DUOL) in May 2025, focusing on viral marketing, AI-enhanced content, and engagement-led subscriber growth. The Dutch Investor echoes this optimism but emphasizes Duolingo’s superior margins, optionality across learning verticals, and favourable comparison to Spotify. While both highlight growth levers, only one frames Duolingo as an emerging platform with outsized monetization potential.

Duolingo, Inc. (DUOL) is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 51 hedge fund portfolios held DUOL at the end of the first quarter which was 52 in the previous quarter. While we acknowledge the risk and potential of DUOL as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and have limited downside risk. If you are looking for an extremely cheap AI stock that is also a major beneficiary of Trump tariffs and onshoring, see our free report on the best short-term AI stock.

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Disclosure: None. This article was originally published at Insider Monkey.