Duolingo’s Bubble Bursts: User Growth Slows and Brand Enthusiasm Wanes
Wells Fargo initiated coverage of Duolingo with an Underweight rating and $239 price target, warning that slowing user growth and waning brand appeal could weigh on the language-learning app’s prospects. The brokerage noted that Duolingo’s daily active user growth slowed to 40% in the second quarter from 48% in the first, with alternative data pointing to continued weakness in the third quarter.
Slowing User Growth: A Concern for Duolingo
The analysts at Wells Fargo have taken a closer look at Duolingo’s user growth, and their findings are concerning. While the company continues to attract new users, its daily active user growth has slowed significantly over the past two quarters. This trend could indicate that Duolingo’s ability to expand its user base is waning.
To understand the full scope of this issue, it’s essential to examine the data in detail. In the second quarter, Duolingo’s daily active users (DAUs) grew by 40%, which may seem like a healthy rate at first glance. However, when compared to the first quarter’s growth rate of 48%, we can see that there has indeed been a decline.
Furthermore, alternative data suggests that this slowing trend is likely to continue in the third quarter. While Duolingo has managed to maintain some momentum, its user growth seems to be stuck in neutral. The analysts at Wells Fargo believe that this issue could have far-reaching implications for the company’s prospects.
Impact of Negative Commentary on Artificial Intelligence
The negative commentary around artificial intelligence (AI) in 2025 appears to have had a lasting impact on Duolingo’s brand appeal. What was once viewed as a revolutionary and innovative approach has given way to apathy and skepticism. The analysts at Wells Fargo believe that this shift in perception is largely responsible for the decline in user growth.
While it may seem counterintuitive, the negative commentary surrounding AI has had an unintended consequence – a decrease in brand appeal. Duolingo’s ability to market itself effectively has been severely impacted by this shift in public opinion.
Engagement on Social Media: A Mixed Bag
So, how is Duolingo performing on social media? According to the analysts at Wells Fargo, engagement metrics are not as strong as they once were. While the company still maintains a significant presence on platforms like TikTok, its engagement levels have been lagging.
Take, for example, the U.S. version of Duolingo’s TikTok account. Engagement metrics suggest that users simply aren’t responding to the content in the same way as before. While this may not be entirely surprising given the changing landscape of social media, it is still a concerning trend for a company heavily reliant on these platforms.
Resistance to Paid Subscriptions
Duolingo has long focused on a freemium model, where users can access basic features for free with optional paid upgrades. However, according to the analysts at Wells Fargo, efforts to boost paid subscriptions are facing resistance from users.
As it stands, Duolingo’s premium "Max" tier is seeing adoption slow after early growth. This not only limits future gains in average revenue per user but also raises questions about the long-term viability of this model.
Converting Free Users into Paying Customers
One major challenge Duolingo faces is converting its free users into paying customers. While some users may be content to continue using the app’s basic features, others are more likely to become invested in the service and subsequently opt for paid upgrades.
However, according to the analysts at Wells Fargo, this process has been hindered by various factors. Negative commentary around AI has led to apathy towards Duolingo’s brand, making it even harder to convince users to upgrade from free to paid subscriptions.
Projections for 2027: 5-6% Below Consensus Estimates
Given the issues outlined above, the analysts at Wells Fargo believe that Duolingo’s revenue and profit in 2027 will be lower than estimated. Specifically, they project a 5-6% shortfall from consensus estimates.
While some investors may still choose to take on this level of risk, it’s essential to consider the underlying reasons for this forecast before making any decisions.
Conclusion
In conclusion, Duolingo faces significant challenges in the form of slowing user growth and waning brand appeal. Negative commentary around AI has led to apathy towards the company’s brand, hindering its marketing efforts.
Furthermore, engagement on social media is less strong than it once was, while efforts to boost paid subscriptions are facing resistance from users. The company’s premium "Max" tier has seen adoption slow after early growth, limiting future gains in average revenue per user.
Given these concerns, the analysts at Wells Fargo believe that Duolingo’s prospects are more uncertain than ever.
