Duolingo downgraded, price target cut by $200 on slowing user growth

Investing.com --DA Davidson downgraded Duolingo to Neutral from Buy and slashed its price target to $300 from $500 amid decelerating active user growth.

The brokerage said Duolingo’s active users slipping about 0.4% from mid-July to late August, a period when growth has historically accelerated ahead of the back-to-school season.

Over the past five years, Duolingo has averaged sequential gains of 8% in monthly active users and 7.2% in daily active users in the third quarter, DA Davidson noted.

Its data implies high-20s percent year-over-year growth in daily active users for the quarter, below consensus expectations.

Subscription penetration has risen modestly, with subscribers up about 2% since mid-July, but still below the roughly 5.5% growth analysts forecast.

The firm also pointed to the exit of Zaria Parvez, who helped build Duolingo’s TikTok following to nearly 17 million and drove billions of impressions across social platforms.

With Duolingo quiet on social media in recent months due to backlash over its AI-first strategy, DA Davidson said her departure could make it harder to reignite growth when the company resumes its viral marketing push.

“We believe Duolingo’s efforts to stabilize user growth in the U.S. may be driven in part by an increase in paid marketing,” analyst at DA Davidson said.

The brokerage said Duolingo appears to be leaning more on paid marketing, spending in the low-single-digit millions compared with less than $1 million historically.

While that marks a shift in strategy, analysts cut their 2026 revenue and EBITDA estimates by about 4% on expectations of continued slowing user growth.

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