DA Davidson has reduced its price target on Duolingo Inc. (NASDAQ: DUOL) to $170 from $205 and left its rating at Neutral, the research firm said following an analysis of proprietary user data. The new target sits close to InvestingPro’s Fair Value estimate, even as Duolingo’s share price has moved well below its 52-week high of $544.93 to trade at $151.56.
The decision reflects DA Davidson’s review of a panel tracking more than 170,000 existing Duolingo users. That dataset showed January delivered the firm’s strongest month-over-month increase since it began monitoring user behavior in July. Despite that immediate strength, the firm cautioned that if January’s trend were to continue through the first quarter, daily active users would land roughly 4% under consensus.
Under DA Davidson’s sensitivity, that pace translates into year-over-year DAU growth of about 19-20%, versus the 25% growth analysts currently expect. The firm highlighted this as a driver behind its lower price target even though other operating metrics remain notable: Duolingo reported 71.99% gross profit margins and revenue growth of 39.86% over the last twelve months.
Duolingo’s share performance has reflected investor scrutiny of growth prospects, with the stock down 13.64% year-to-date and off 53.63% over the prior twelve months.
DA Davidson also noted a potential upside scenario: should January’s month-over-month increase persist through the second quarter, year-over-year DAU growth could reaccelerate into the low-to-mid 20% range. Still, the firm emphasized that Duolingo must demonstrate an ability to revive churned users and expand internationally in order to push user growth above current consensus—an outcome DA Davidson does not view as likely for the first and second quarters of 2026.
Balance sheet and upcoming catalysts
According to InvestingPro data referenced in the analysis, Duolingo holds more cash than debt, and analysts continue to model further sales growth for the company this year. Duolingo’s next quarterly report is scheduled for February 26.
Leadership change and preliminary fourth-quarter results
The company disclosed a change in finance leadership: CFO Matt Skaruppa is set to depart, and long-serving board member Gillian Munson will step into the CFO role. Duolingo also released preliminary fourth-quarter figures indicating daily active user growth of roughly 30% and bookings at or marginally above the upper end of guidance of $335.5 million.
Broker responses to these developments have varied. Truist Securities reiterated a Buy rating and maintained a $245 price target, pointing to advances in artificial intelligence that the firm says are benefiting product development and real-time interactive features, and supporting ongoing improvements in personalization. KeyBanc Capital Markets kept a Sector Weight rating, citing confidence that the CFO transition will be smooth given Munson’s long experience with the company. Citizens preserved a Market Perform rating, reflecting continuity amid the leadership change.
Investor takeaway
DA Davidson’s downgrade of the price target and its Neutral stance underscore the centrality of user-growth trajectories in Duolingo’s valuation. The firm’s proprietary user-panel signals present a mixed picture: the strongest month-over-month increase was recorded in January, but if that pattern simply persists rather than accelerates, DAU could lag consensus in the near term. Duolingo’s high gross margins and substantial revenue growth provide support to longer-term fundamentals, while the company’s cash position and a closely watched earnings report on February 26 offer near-term data points for investors weighing user engagement trends against ongoing innovation and a managerial handover.