Duolingo (NASDAQ:DUOL), the world’s largest language-learning solutions provider, is proving to be one of the most popular US stocks on the Trading 212 investment platform. Since 18 October, there’s been a 61% increase in the number of investors holding the stock in their accounts.
And yet it could be one of the biggest losers from the artificial intelligence (AI) revolution. According to research undertaken by Microsoft, interpreters and translators are the most vulnerable. Apparently, there’s a 98% overlap with AI and their roles. If fewer people are going to have a career as a linguist, it stands to reason that Duolingo’s going to suffer. Or does it?
A double-edged sword
The company claims that 1.2bn people are currently learning a language. It says “the majority are doing so to gain access to better opportunities”. This includes those looking to travel between countries — either on a permanent or a temporary basis – as well as some individuals who enjoy learning for its own sake.
Not surprisingly, the company’s business model seeks to appeal to as many of these people as possible. It involves providing “free language education” with “no hidden fees [and] no premium content”. However, the company isn’t a charity. It has an obligation to its shareholders to be profitable.
One of the ways in which it achieves this is by selling advertising space and charging users to remove these adverts.
It also charges for its AI-based ‘Duolingo Max’ offering. As well as providing extra insights when users get things wrong, it offers a roleplay function where learners can interact with characters on the company’s app. In addition, conversational skills can be practised via a video call feature with Lily.
The group’s also using AI to cut costs, although it hasn’t been easy. As if to prove Microsoft’s prediction right, earlier this year, Duolingo unveiled plans to cut headcount and become an “AI-first company”. But there was such an outcry that it had to temporarily close down its social media accounts.
The group’s share price is now (18 November) trading at 67% below its 52-week high. However, the company’s chief executive recently said: “We are one of the few… that has found a way to make profit off of AI.”
This could explain why so many Trading 212 users are keen on the stock.
Some numbers
During the third quarter of 2025, the group disclosed that it had 11.5m paid subscribers out of a total of 135.3m monthly active users. With only 8.5% of its customers prepared to pay for its services, there’s plenty of scope to generate more revenue. And like most software businesses, it’s able to command a healthy gross profit margin. It was 72.5% during the quarter.
Analysts are expecting earnings per share of $3.32 for 2025. But this is where I have a problem. The stock’s currently trading on a multiple of 53 times forecast earnings.
This looks expensive to me. And the 43% fall in its share price over the past month isn’t a good look. It suggests there’s less enthusiasm for the stock than might be indicated by recent activity on the Trading 212 platform.
In my opinion, there are plenty of other US stocks to consider offering better value at the moment, including ones operating in industries with less uncertain futures.
