Duolingo, Inc. has emerged as a compelling investment opportunity according to a recent bullish thesis published by Antonio Linares on Investment Ideas by Antonio’s Substack. The language learning platform’s stock was trading at $142.80 as of January 28th, with trailing and forward price-to-earnings ratios of 18.40 and 25.51 respectively, according to Yahoo Finance. Linares argues that the market is fundamentally misreading recent deceleration in daily active user growth, creating what he describes as a fortune-making phase for investors.
The mobile learning platform operates in the United States, the United Kingdom, and international markets, serving just over 50 million daily active users. According to the investment thesis, management has explicitly stated that platform retention remains strong, with no meaningful changes observed despite market concerns about competitive pressure from ChatGPT.
However, Linares contends that the narrative around Duolingo stock overlooks the company’s fundamental nature as an AI-native business. The recent slowdown in user growth represents a deliberate strategic shift rather than external competitive threats, the analyst argues. Management has signaled a renewed emphasis on improving learning outcomes, confident that better teaching ultimately translates into sustained user growth.
Additionally, the thesis highlights Duolingo’s historical pattern of non-linear growth cycles. When daily active user growth has stalled in the past, the company successfully reaccelerated by identifying and optimizing a single metric that disproportionately drove user lifetime value. This operating discipline remains intact today, according to Linares, even as the company pursues what management views as a multi-trillion-dollar global education opportunity.
The company continuously balances three key levers: monetization, user growth, and teaching quality. This approach is evident in fluctuating but steadily rising free cash flow margins, alongside strong revenue and operating cash flow growth. Meanwhile, adjusted EBITDA margins are tracking close to long-term targets even as Duolingo continues to invest in innovation.
New product features such as Energy are already demonstrating the effectiveness of this strategy by simultaneously boosting bookings and daily active users, the report indicates. Critically, Duolingo’s value creation is driven by rapid iteration, a process meaningfully accelerated by artificial intelligence, enabling faster improvement in learning outcomes at lower cost.
In contrast to current market sentiment, Linares emphasizes that as teaching effectiveness compounds, free cash flow per share is poised to accelerate materially. Given that long-term stock prices ultimately follow free cash flow, Duolingo appears materially undervalued, offering investors an opportunity to own what he characterizes as an extraordinary business at a moment of widespread misperception.
The investment thesis acknowledges previous bullish coverage of Duolingo stock by Lorenzo Bastianelli in May 2025, which highlighted viral marketing-led user growth, rising engagement, and expanding AI-driven course offerings. However, the stock price has depreciated by approximately 71.62% since that coverage due to valuation compression and daily active user growth concerns.
Furthermore, Linares shares a similar thesis but places greater emphasis on long-term free cash flow acceleration driven by AI-led iteration and teaching quality improvements. According to available data, 50 hedge fund portfolios held Duolingo at the end of the third quarter, down from 55 in the previous quarter.
Market participants will be watching whether Duolingo can successfully execute its strategy of improving teaching outcomes while maintaining user growth momentum. The company’s ability to leverage artificial intelligence for rapid iteration and cost reduction remains central to the bullish investment case, though the timeline for demonstrating measurable results remains uncertain.
