Duolingo DUOL Stock Crashes 23% After Earnings: Growth Over Profits Strategy Shocks Wall Street
Duolingo stock is in freefall this morning. The DUOL stock price plunged more than 23% in after-hours trading on Thursday, February 26, 2026 ET, after the language-learning company delivered a Q4 earnings beat but simultaneously issued 2026 guidance that sent investors scrambling for the exits. CEO Luis von Ahn made a deliberate and public choice: prioritize user growth over near-term profits — and Wall Street is not happy about it.
DUOL Stock Crashes to New 52-Week Low After Earnings Report
During Thursday's trading session, Duolingo DUOL stock reached a daily high of $119.14 before collapsing to a low of $88.60 — a stunning intraday swing. The stock's 52-week range now spans from a high of $544.93 all the way down to the new low of $88.60.
The DUOL stock price has now fallen 33.4% year to date and 68.7% over the past 12 months — making it one of the worst-performing tech stocks of the past year. Retail investors on social media are pushing back hard, with many calling the selloff "stupid" given the company's underlying fundamentals.
Q4 Revenue Beats Estimates — But Guidance Is the Problem
The actual Q4 2025 earnings results were not the problem. Duolingo's quarterly revenue rose 35% to $282.9 million, compared with Wall Street expectations of $276 million. CEO Luis von Ahn told investors in his shareholder letter: "We closed 2025 with strong momentum, surpassing 50 million daily active users and generating more than $1 billion in bookings for the first time."
The shock came from forward guidance. Duolingo forecast first-quarter bookings of approximately $301.5 million — well below analyst estimates of $329.7 million. For the full year, the company forecast bookings of $1.27 to $1.30 billion, compared to Wall Street estimates of $1.39 billion. That gap crushed the post-market session.
Luis Von Ahn's Pivot: Sacrifice Profits to Double Daily Active Users by 2028
The strategy behind the Duolingo DUOL stock selloff is a deliberate CEO-driven pivot. The language-learning app said it would step up investment in artificial intelligence and sacrifice some degree of monetization in order to accelerate user growth and engagement, with the goal of doubling the current number of daily active users to 100 million in 2028.
As part of the push, Duolingo will expand access to its AI-powered "Video Call with Lily" feature by adding it to its Super Duolingo subscription rather than limiting it to the premium Max tier — deliberately trading near-term revenue per user for broader engagement. Von Ahn told Reuters: "If we're seeing faster user growth than we're expecting, and what we are expecting is about 20%, then that means the strategy is working."
Adjusted Profit Margins Set to Compress Sharply in 2026
The financial cost of the Duolingo growth pivot is significant and transparent. Bookings are now expected to rise about 11% in 2026, compared with roughly 20% growth the company said it could have delivered under its previous approach. Adjusted core profit margin is forecast to decline to about 25% this year as Duolingo invests in broader access to AI features and steps up marketing.
Duolingo said daily active user growth decelerated through 2025 and is expected to fall to roughly half the pace it sustained in prior years. The company also announced a $400 million share repurchase program — a capital allocation move designed to signal confidence and manage dilution even as near-term earnings come under pressure.
Analysts and Retail Investors Clash Over DUOL's Long-Term Value
The market is deeply divided on what Thursday's Duolingo DUOL stock crash actually means. One analysis framework suggests the stock is now 76.5% undervalued on a discounted cash flow basis, with an estimated intrinsic value of $499.33 per share compared to its current trading price. That gap between perceived fair value and current price has retail investors calling the selloff an overreaction.
Von Ahn framed the pivot in plain terms during the post-earnings call: "Long-term value in this business is driven by two things — the size of our active learner base, that's like the size of the pie, and how effectively we monetize that base. At this moment, we are prioritizing growing the size of the pie." Whether Wall Street buys that argument will determine the direction of DUOL stock when markets open this Friday morning ET.
