Morgan Stanley recommends Duolingo as a strong investment opportunity
- Morgan Stanley launched coverage of Duolingo with a positive investment rating.
- Analyst Nathan Feather set a price target of $435, indicating 29% potential growth.
- Duolingo's combination of rapid growth and AI innovations positions it for substantial market expansion.
On April 23, 2025, Morgan Stanley initiated research coverage of the digital language learning platform Duolingo with an investment rating of overweight. Analyst Nathan Feather assigned a price target of $435, which indicates a potential upside of nearly 29% from the stock's closing price the previous day. This news comes as Duolingo is seeing significant user growth and is expected to benefit from advancements in generative artificial intelligence, positioning it as a promising opportunity in the consumer internet sector. Feather highlighted that Duolingo operates in a market valued at $220 billion, yet the company currently holds only about 0.5% of that market share, indicating substantial room for growth. The company's monetization also appears to be lagging, with revenues reportedly five times less than some of its competitors. However, the analyst expressed optimism around new product-first subscription offerings that could enhance revenue streams in the near future. In the context of an evolving technological landscape, Duolingo stands out for its use of generative artificial intelligence, which Feather described as a "rare commodity" among small and mid-cap internet stocks. Duolingo's innovative approach to combining mobile gaming with language learning is believed to significantly expand its market potential. The company's share value saw an immediate reaction, with a 12.4% increase during the early trading hours as investors responded to the positive outlook set forth by Morgan Stanley. Earnings for Duolingo are scheduled for release on May 1, providing key insights into the company's financial performance and strategic developments. The heightened interest in Duolingo shares reflects a broader trend on Wall Street where a majority of analysts have recommended buy-equivalent ratings on the company. Investors and analysts alike are keenly monitoring the company’s progress as it navigates the challenges of a competitive digital learning environment while capitalizing on technological advancements.