Stock of the Week: Duolingo

Recently floated language app has been a lockdown winner, but China and rivals could thwart its ambitions

James Gard 3 September, 2021 | 11:05AM
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Stock of the week post-it

With many children going back to school this week, learning and education are very much on our minds at Morningstar.co.uk. We asked our Twitter followers to choose an appropriate stock and they’ve gone for language learning app Duolingo (DUO). The company is the newest to feature as our stock of the week, having only listed at the end of July this year. Like many US floats in recent years, Duolingo’s shares are up sharply from the offer price, with a 50% gain for investors who bought into the IPO.

As with music streaming service Spotify (SPOT), Duolingo operates a “freemium” model with free accounts supported by advertising and a paid-for subscription service known as Duolingo Plus, which costs users roughly $70 a year. The app motivates users to keep going using “nudge” psychology and gaming features to keep learners logging in every day to keep up their daily "streaks". While you can interact and compete with other users, it’s possible to learn a language without any human interaction at all, with the app relying heavily on machine learning and AI.

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James Gard  is content editor for Morningstar.co.uk

 

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