Trade Alert: Bought Duolingo (DUOL) $174, Long Term Buy 3-5 years. Target 16-18% return per year.
First recommended on June 24th, at $206, I’ve added at around $190 and $174.
2nd quarter results were excellent, besides the 41% sales growth, adjusted earnings were 130% higher – this is the 5th quarter of profitability, its still a tiny company at $733Mn in annual sales, but it has become a very strong market leader in language learning popular with the younger TikTok, Instagram generation, they use gaming and streaks to keep this cohort engaged, apparently 7Mn people are on streaks of 365 days or longer. This is an under the radar company and they’ve actually been making strides using AI for product enhancements – they have all the data in the world….and they’re monetizing in their higher tiers, which says a lot. AI translation from Chat GPT or even Google Translate will always be there but they have limited functionality and since Duolingo’s users are hobbyists, or use it for work, they come back for the immersive interactive engagement.
The article on Duolingo should be out tomorrow and I’ll post it for more details.