Some might have thought that language instruction service Duolingo (NASDAQ:DUOL) might suffer the same fate that Chegg (NYSE:CHGG) did not so long ago. But based on Duolingo’s latest earnings report, it dodged that bullet in grand style, and investors took notice as well, sending Duolingo share prices up over 8% at the time of writing.
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Duolingo’s earnings report delivered no shortage of good news. Though it ultimately posted a loss of -$0.06 in earnings per share, that was far better than the -$0.24 analysts expected. Revenue, meanwhile, managed to not only beat estimates but improve on last year. Duolingo posted revenue of $115.66 million, which beat projections calling for $112.66 and was up 42.4% year-over-year.
That by itself was excellent, but Duolingo kept the good times rolling. Daily active users were up 62%, reaching 20.3 million. Monthly active users hit 72.6 million, up 47%. Even some factors beyond Duolingo’s control were starting to look up. The Federal Reserve might stop hiking interest rates, and that would give stocks like Duolingo—that depend on discretionary income—room to breathe as inflation starts to come back down and people actually have discretionary income again.
Overall, Wall Street has a Strong Buy consensus rating on DUOL stock based on six Buy ratings and two Holds. However, Duolingo stock also comes with 6.26% downside potential thanks to an average price target of $136.43.
