Shares of Duolingo Inc. tumbled by more than 26% on Thursday, after the popular language learning platform issued a weaker-than-expected outlook for the third quarter, signaling a strategic pivot toward AI-driven teaching quality and user growth over short-term monetization.
The company said it expects bookings between $329.5 million and $335.5 million, falling short of analysts’ projections of $344.3 million. Adjusted EBITDA was guided in the range of $75.4 million to $78.8 million, below the $80.5 million expected by Wall Street, triggering a sharp selloff in early trade.
CEO and co-founder Luis von Ahn explained the rationale behind the shift, stating:
“We decided to shift the balance towards longer-term initiatives. We’re investing proportionally more in teaching better, and we’re prioritizing user growth over monetization in the A/B tests. This shift is reflected in our full-year guidance.”
Despite the stock’s plunge, Duolingo reaffirmed its long-term focus on improving educational outcomes through artificial intelligence integration, which it sees as key to sustaining user engagement and differentiation in the increasingly competitive edtech landscape.
At 9:53 a.m. ET, Duolingo’s shares were trading at $190.64, down 26.68%, marking one of the sharpest single-day declines in its recent history.
