Duolingo (NASDAQ: DUOL) is proof that a business can have solid fundamentals but a waning stock price.
The green bird hasn’t fared well with its 38% year-to-date decline, but the edtech company presents a compelling opportunity
All of the right numbers continue to trend upward, and that should eventually reflect on the stock price, which trades at a 15.7 forward price-to-earnings (P/E) ratio. Duolingo continues to attract new users and boost its revenue High revenue growth is one of the hallmarks of a successful growth stock, and Duolingo checks that box. Revenue increased by 27% year over year as the app reached 56.5 million daily active users, which is up by 21% year over year.
The edtech company also reached 12.5 million paid subscribers, a 21% year-over-year improvement. High user growth and revenue gains, combined with a rising net income, are signs of a healthy company. It comes as Duolingo makes changes to its app in an effort to drive “long-term engagement and loyalty.” Duolingo recently changed its app to incorporate more speaking practice, instead of users just clicking on the correct answer.