TLDR
- D.A. Davidson upgraded Duolingo from Neutral to Buy with a $160 price target, up from $130
- DUOL stock rose 7% on Tuesday to around $135.16, while the broader market fell
- The analyst sees DAU growth accelerating, with Q3 DAUs forecast up 24% year-over-year
- Duolingo has fallen 60% over the past 12 months and sits 75% below its May 2025 record high
- D.A. Davidson believes the company’s product, marketing, and monetization work is undervalued by the market
Duolingo (DUOL) stock climbed roughly 7% on Tuesday after D.A. Davidson analyst Wyatt Swanson upgraded the stock from Neutral to Buy, setting a new price target of $160.
That target is up from a prior $130 and implies about 23% upside from Monday’s closing price.
The stock traded at $135.16 during Tuesday’s session. That gain came even as the S&P 500 slipped 0.6% and the Nasdaq Composite dropped 1.3% on the same day.
It has been a rough stretch for DUOL. The stock is down 23% in 2026 and has lost 60% over the past 12 months.
It also sits 75% below its all-time closing high of $540.68, set on May 14, 2025. A lot of that pressure has come from investor concern that AI tools could eat into Duolingo’s core language-learning business.
What Changed for D.A. Davidson
Swanson’s upgrade rests on the view that Duolingo’s underlying work on its product, marketing, and monetization engine is being overlooked by the market.
“Duolingo is nearing a turning point,” Swanson wrote in his note.
The analyst pointed to daily active users as a key metric to watch. He said June marked an inflection point for DAU growth and that the firm’s data through August 15 points to Q3 DAUs rising 24% year-over-year.
D.A. Davidson also sees strength continuing into July and August, with the company holding onto users that previously would have churned off the platform.
Monetization in Focus
Beyond user growth, the firm sees positive momentum in how Duolingo is turning that growth into revenue.
Extended free trials, new subscription tiers, and an updated advertising setup are all part of what Swanson flagged as underappreciated by investors.
Swanson also acknowledged the risk in the call. He noted that if the firm is too optimistic on revenue reacceleration, downside risk is still limited because consensus estimates for future years are not stretched and the stock is not trading at an inflated multiple.
“If we are over-optimistic on the top line reacceleration, we view less downside risk given out-year consensus estimates aren’t demanding and Duolingo isn’t currently trading at an inflated multiple,” he wrote.
The upgrade comes as Duolingo has been narrowing its focus to improving its core education courses and growing its daily user base.
D.A. Davidson’s data through August 15 suggests that effort is starting to show up in the numbers.
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