Duolingo could still have a lot of room to grow, but its premium valuation could limit its upside potential in this challenging market for growth stocks.
Today, it's valued at just $3.7 billion, or ten times the revenue it's expected to bring in in 2022.ĭuolingo looks a lot cheaper today, but it still can't be considered undervalued since plenty of other growth stocks - some of which are firmly profitable - are now trading at single-digit price-to-sales ratios. At the time, it was valued at $7.6 billion, or 26 times the revenue it would generate in 2021. Is Duolingo's stock worth buying right now?ĭuolingo's stock closed at an all-time high of $202.69 last September. Its margins could also improve significantly if Alphabet's Google and Apple are forced to further lower their app store fees. That projection seems extremely bullish, but it's likely based on the assumption that Duolingo will keep gaining active users, its ratio of paid subscribers will continue climbing, and it will rein in its operating expenses as economies of scale kick in. Analysts expect it to post a positive adjusted EBITDA of $1.6 million in 2022, followed by a big jump to $25.6 million in 2023.
For the full year, Duolingo expects its adjusted EBITDA to come in between $0 to $3.0 million.
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