New York, March 1, 2026, 14:45 EST — Markets have shut for the day.
- Duolingo dropped 14% Friday after the company signaled weaker 2026 bookings and outlined a strategy change.
- Citing shrinking margins and less visibility, Morgan Stanley and Citi both downgraded the stock and took an axe to their price targets.
- Investors are watching for any early hints on user growth, monetization and spending before the open on Monday.
Duolingo dropped another 14% by Friday’s close, capping off two rough sessions after the language-learning platform announced plans to prioritize user gains over short-term revenue and profit growth.
Here’s the rub: Duolingo signals 2026 won’t be a year for clean, linear profit growth—instead, it’s gearing up for heavier spending and expansion. That doesn’t land softly, with investors already edgy over pricey growth stocks and the looming question of how AI will shuffle the deck for software leaders.
The company, which trades on Nasdaq, closed out Friday at $101. Shares hit a session low of $91.99, per Investing.com data.
Duolingo shares slid late Thursday after the company projected first-quarter and full-year 2026 bookings that fell short of Wall Street’s expectations. Executives flagged a strategic pivot that’s set to pressure bookings growth and margins this year. Bookings capture total sales—revenue, both recognized and not.
Duolingo is forecasting first-quarter bookings to come in around $301.5 million. That’s below the $329.7 million analysts had been looking for. For the full year, the company is guiding to a bookings range of $1.27 billion to $1.30 billion, compared with Wall Street’s $1.39 billion estimate, according to Reuters, which cited Visible Alpha and LSEG data.
Management is targeting about 11% bookings growth for 2026, with the adjusted core profit margin seen landing near 25% as the company ramps up marketing and pushes broader adoption of its AI features, according to Reuters.
Duolingo plans to open up its AI “Video Call with Lily” feature to Super Duolingo subscribers, dropping the Max-only restriction. The company also said more AI-based speaking tools will become available to free users. Reuters
CEO Luis von Ahn told Reuters, “If we’re seeing faster user growth than we’re expecting, and what we are expecting is about 20%, then that means the strategy is working.” Reuters
Brokers wasted no time. Nathan Feather at Morgan Stanley cut his rating on the stock to Equal Weight from Overweight, flagging that Duolingo is ramping up spending and pulling back on monetization in a “material” way. He also questioned whether daily active user growth can actually stabilize. TipRanks
Citi downgraded Duolingo to Neutral from Buy, describing 2026 as a “transition year.” Analysts cited limited visibility from the company’s recent pivot and flagged increased investment pressure, saying the risk-reward now looks “more balanced.” TipRanks
But here’s the rub: should the increased product investment and softer monetization fail to jumpstart user growth, Duolingo faces the risk of both bookings losing steam and margins narrowing. In that scenario, the stock would likely have to reset to a cheaper valuation.
Next week, eyes are on more analyst moves and the latest reads on user trends, before attention shifts to whether those initial signals suggest the company’s growth push is sticking when U.S. markets reopen Monday, March 2.
