I added a handful of new exciting growth companies to my Stocks and Shares ISA this year. However, a couple have failed to make me any money yet. In fact, one of them is already firmly in the red.
Looking ahead, though, I still think they could turn out to be good investments, if I’m patient. Both are still growing nicely.
Big ambitions
The growth stocks in question are cross-border payments provider Wise (LSE:WISE) and ed-tech firm Duolingo (NASDAQ:DUOL). Wise is down slightly since I first invested a few months ago, while Duolingo has crashed more than 50%.
So, what problem(s) are these companies trying to solve? Why do they exist?
Let’s start with Wise. It says that for people and businesses worldwide, “moving and managing money internationally remains expensive, slow, inconvenient and opaque“. To address this, the firm wants to make this process far cheaper, quicker, and more transparent.
The market opportunity that comes with solving this problem is massive, estimated at roughly £32trn. And today, Wise has just 5% and less than 1% share, respectively, of the growing personal and business cross-border payments markets.
In the six months to 30 September, Wise customers moved £84.9bn, a year-on-year increase of 24%. However, the company wants to eventually move trillions worldwide rather than billions.
As for Duolingo, which is known for language learning, it believes that AI will radically transform education. Using this technology, it aims for its app to be as good as a human tutor, but also much cheaper (free for most) and far more engaging.
In Q3, Duolingo’s daily active users topped 50m for the first time. Monthly active users hit 135.3m, while paid subscribers rose 34% to 11.5m. Long term, the company aims to have 1bn+ users and many subjects (it currently offers maths, music, chess, and 40 languages).
Looking long term
Both firms are investing to capture huge market opportunities ahead. In general, analysts don’t like this (they’re more short-term focused). So this strategic focus on growth over profit maximisation is a near-term risk to both.
In H1, Wise’s underlying income grew 13% to £749.5m, but underlying pre-tax profit fell 17% to £122m. This was due to an increase in investments in infrastructure and 1,000+ new hires to support growth.
However, management says the full-year underlying pre-tax profit margin will still be around 16%, at the top of its mid-term target of 13%-16%. So this doesn’t worry me, especially as the firm’s solid operational progress continues.
Wise is now integrated into the local payment infrastructure of Brazil, and soon Japan, and has secured regulatory approvals to launch its products in the UAE.
As Wise continues to lower its take-rate, it looks likely to capture more market share, especially in the large business segment. Incredibly, 74% of transfers are now completed instantly.
Meanwhile, Duolingo has announced it will shift focus from monetisation (converting free users to paying subscribers) back to user growth. This may hurt bookings in 2026.
| Wise | Duolingo | |
|---|---|---|
| Market cap | £9.3bn | $9bn |
| FY26 revenue (forecast) | £1.8bn (11.8% growth) | $1.3bn (23.6% growth) |
| Margin | 16.3% (underlying pre-tax margin) | 29% (adjusted EBITDA) |
| Forward price-to-earnings ratio | 25 | 41 |
So far, these stocks have been bad picks for me, especially Duolingo. But according to Grand View Research, the global digital education market is projected to reach $133.7bn by 2030, growing at a compound annual rate of 31.5%.
In my view, both these growth stocks are still worth considering. Their long-term potential looks underappreciated, and I think my patience will reward me over time.
