Morgan Stanley analyst Nathan Feather maintained a Buy rating on Duolingo today and set a price target of $300.00.
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Nathan Feather has given his Buy rating due to a combination of factors, primarily focusing on Duolingo’s impressive user growth. Despite concerns about monetization, Duolingo’s daily active users (DAUs) showed a significant increase of 36% year-over-year, surpassing expectations and indicating a strong user base expansion. This growth is critical as it counters previous data suggesting stagnant user numbers, showcasing the company’s ability to attract and retain users.
However, the decision to prioritize long-term user growth over immediate monetization has led to a conservative fourth-quarter bookings guidance, which fell short of market expectations. While this has raised some concerns, Feather maintains an optimistic outlook, believing that the focus on user growth will eventually stabilize and support Duolingo’s long-term prospects. The emphasis on expanding the user base, despite short-term financial trade-offs, underpins the Buy rating, with a price target set at $300.
Based on the recent corporate insider activity of 104 insiders, corporate insider sentiment is negative on the stock. This means that over the past quarter there has been an increase of insiders selling their shares of DUOL in relation to earlier this year.