Duolingo looks set to tap into a potential global user base in the billions, according to JMP. The investment firm upgraded the language education stock to a market outperform rating from market perform. Analyst Andrew Boone accompanied the move by establishing a $400 price target. Shares of Duolingo have surged 36% over the past 12 months, but have slipped 9% so far this year. Boone’s new price forecast is approximately 36% above Duolingo’s Monday closing price of $294.18. DUOL 1Y mountain DUOL 1Y chart “Our price target multiple is a premium to the comps, which we justify given Duolingo’s massive [total addressable market], competitive advantage with freemium, product catalyst in Max, and ramping profitability,” Boone wrote. As a catalyst, Boone pointed to the company’s rollout of Duolingo Max, a user subscription tier enhanced with premium AI-powered offerings. Max only accounted for 5% of Duolingo’s subscription base at the end of 2024, but Boone believes it could be a growth vector for the company this year. “This as family plan penetration continues to grow and we believe these products can more than offset international mix-shift headwinds to pricing, which happened in 4Q24,” the analyst wrote. However, Boone added that Duolingo’s growth potential extends far beyond simply its subscription base. Instead, the company’s total addressable market could reach into billions of potential users. “Given Duolingo reduces the friction of learning a language through bite-sized lessons, engaging content, and a digital experience (vs. in-person classes), we think it attracts users who want to spend time learning and/or playing games. To this end, we note there are ~2B global language learners and 3.4B global gamers,” he wrote. The analyst added that Duolingo also has the potential to retain its users, with 73% of Americans describing themselves as “lifelong learners,” he said, citing a Pew Research study. “Extrapolating this stat globally, we think Duolingo may be an attractive service for the majority of smartphone owners, suggesting a new framework to view Duolingo’s opportunity, especially as it ramps its music, math (brain teasers), and future courses,” he wrote.
