Is DUOL a good stock to buy? We came across a bullish thesis on Duolingo, Inc. on Jordan Martenstyn’s Substack. In this article, we will summarize the bulls’ thesis on DUOL. Duolingo, Inc.’s share was trading at $101.54 as of March 5th. DUOL’s trailing and forward P/E were 12.11 and 16.81 respectively according to Yahoo Finance.
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Duolingo (DUOL) is a global leader in language learning and digital education, trading at its lowest valuation since IPO with a 10% free cash flow yield and over $1 billion in net cash. The market has mispriced the company, overestimating AI disruption and extrapolating short-term growth moderation as evidence of structural decline.
Duolingo’s core competitive advantage lies in its behavioural engagement mechanisms, including structured progression, reinforcement loops, habit formation, and gamified accountability, which generic AI solutions cannot replicate. With 133 million monthly active users and over a decade of proprietary longitudinal data, Duolingo is well-positioned to integrate AI, enhancing content creation, personalization, and expansion into new languages and subjects.
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Since IPO, Duolingo has compounded growth and profitability impressively: daily active users grew from 10.1 million to 52.7 million (51% CAGR), paid subscribers from 2.5 million to 12.2 million (49% CAGR), and revenue from $251 million to $1.04 billion (43% CAGR), while free cash flow margins expanded from 5% to 35%. Recent growth moderation is intentional, as management prioritizes product investment to accelerate MAU growth in 2027-2028. Market saturation fears are unfounded; penetration remains low in core markets, suggesting substantial upside.
Duolingo’s capital-light business model, strong balance sheet, and $360 million in annual free cash flow provide resilience and optionality, including a $400 million share repurchase program in 2026. The company is successfully diversifying into adjacent learning verticals, including chess, music, and maths, further reducing AI disruption risk. Valued at 3x forward revenue and a 10% free cash flow yield, the market prices Duolingo as a declining asset despite its premium growth and margins. With limited downside and significant IRR upside potential, the current sell-off presents an attractive entry point for long-term investors seeking a high-quality compounder.
Previously, we covered a bullish thesis on Duolingo, Inc. (DUOL) by Lorenzo Bastianelli in May 2025, which highlighted the viral “Dead Duo” campaign, strong MAU and DAU growth, and expansion into chess, music, and math. DUOL’s stock price has depreciated by 79.83% since our coverage due to concerns about slowing user growth and increased competition. Jordan Martenstyn shares a similar view but emphasizes free cash flow strength, market mispricing, and AI resilience.
Duolingo, Inc. is not on our list of the 40 Most Popular Stocks Among Hedge Funds. As per our database, 51 hedge fund portfolios held DUOL at the end of the fourth quarter which was 50 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 doing so within a shorter time frame. If you are looking for an AI stock that is more promising than DUOL and that has 10,000% upside potential, check out our report about this cheapest AI stock.
Disclosure: None.
