DUOL
Duolingo
Recurring SaaS
★ Quality 33/100Price today
$123.13
what the market pays
Worth
$187.64
calculated cycle value
Price is 34% below its value
charlieapp.co
Unusually large discount. A gap this wide usually means the market is pricing in a risk (AI disruption, for example) that the model does not penalise. A contrarian opportunity: high upside, but high risk — not an obvious one.
Price vs Intrinsic Value
The line is the price month by month; the green band marks when it's undervalued (−20% off value). When the price drops in there, the discount is real, not opinion.
Where does the value come from?
Software and subscriptions
App de idiomas · Duolingo English Test
$166.19
per share
How it's calculated
⚠️ C13: Real-time AI translation (T-Mobile feb-2026) threatens core business. BUT: 50M DAUs, gamification moat, expanding into math/music/chess. Revenue $1.04B (+39%), FCF ~$440M, P/FCF 9.8x (crashed -83% from ATH $545). Even with C13 = massive undervaluation. Real existential risk but price implies total destruction. VERY small position due to C13. Undervalued <$200.
Net cash in the bank
cash minus financial debt, per share
Total calculated value
business + cash
How many times the cash flow
Recurring SaaS · vs 26 peers
You pay 13.2x times this business's cash flow; its sector median is 21.9x.
63% below what Charlie thinks it's worth (21.5x) — that gap is your safety margin.
Why Undervalued?
Its free cash flow is $7.73/share × 21.5x multiplier plus $21.45 in net cash = $187.64 in intrinsic value. Today's price of $123.13 is 52% below that value — there's a real safety margin to enter.
The price is 34% below the calculated value. There's a real safety margin.
The model asks for a discount to absorb estimate errors. That cushion is here.
If the business disappoints a little, the price should hold near $150.11.
At what price would buying make sense?
Entry zones
🟢 Undervalued
≤$150.11
-20% off Value
🟡 Discounted
≤$178.26
-5% off Value
🟢 Today
$123.13
+52% Valor
Undervalued
Today's price offers a real discount to the calculated value. For the long run, this is the kind of entry that builds wealth.
“Price is what you pay. Value is what you get.”
— Warren Buffett
Model updated · July 2026
The business
The green owl blackmails you with streaks so you come back every day.
Duolingo is a free language-learning app that monetizes two ways: premium subscription (Super/Max) and advertising. It has 50 million daily active users and books $1.04B in revenue, growing 39%. Now it's expanding the same game engine to math, music, and chess.
Its edge is psychological: it turned studying into an addictive habit with streaks, levels, and reminders. The brand and its library of gamified content are hard to copy fast. But it's not a deep moat; nothing stops a rival with better tech from replicating the mechanics.
Revenue history
From $0.3B to $1.0B in 4 years — nearly 3.3x its size. Selling more and more is the base of everything else.
Where each $100 of sales goes
Revenue $1.0B · FY2025
Of every $100 in sales, $60 goes to costs and operations; $40 is left as net profit (40% margin).
Catalysts and risks
Expansion into math, music, and chess widens the market beyond languages.
Converting its 50 million daily users to paid subscription.
Duolingo Max with AI features raises revenue per user.
Real-time AI translation (T-Mobile deal, feb-2026) threatens the heart of the business: learning languages.
Without a deep moat, AI giants like Google or OpenAI can imitate the mechanics.
The stock fell 83% from its peak; brutal volatility for weak stomachs.
Charlie's note
“Growing 39% with 72% margins while trading at a single-digit multiple of its free cash flow almost doesn't exist. The discount has a reason: instant AI translation could gut the core product. Small position, don't bet the house.”
Analysis · July 2026
So when would be a good price for Duolingo?
Today it trades below what we calculate. If you want us to tell you when that changes —or when the value itself moves because the company reported— we will email you.
🔔 Email meFree · no card
Charlie informs, it doesn't advise. No information should be taken as a recommendation to buy or sell.