$DUOL

Next week we’ll be sharing some of our work on Duolingo $DUOL, one of the more interesting setups we’re seeing this year. At today’s valuation, a positive outcome seems very likely unless the business is completely falling apart, the product is getting worse, and management doesn’t know how to monetize without breaking engagement. That appears to be the opposite of what the fundamentals and underlying data reveal. The market didn't want to pay 50x FCF for 25–30% revenue growth in a consumer app. Fair enough. But sub-10x for a business that can still grow 20%+, with massive operating leverage and phenomenal unit economics, suggests the market is now extrapolating an intentional strategy shift and monetization pause as permanent deceleration. It feels somewhat similar to $NFLX in Q2 2015