Duolingo stock scored a price-target hike on Thursday from an analyst who is increasingly bullish on prospects for the company's language learning app.
Needham analyst Ryan MacDonald reiterated his buy rating on Duolingo stock and upped his price target to 385 from 370 after visiting with the company.
On the stock market today, Duolingo stock advanced 0.7% to close at 335.22.
Duolingo shares have pulled back since hitting a record high of 378.48 on Dec. 5.
Duolingo is entering its next phase of growth, which includes the use of generative artificial intelligence chatbots to teach languages, MacDonald said in a client note.
"While GenAI has thus far been viewed as a disruptor to the education ecosystem, Duolingo is starting to harness the technology for a monetizable use case that we believe will be a powerful tool in expanding their reach to a large set of English language learners that have historically shown low free-to-paid conversion," he said.
Duolingo Stock Is On Two IBD Lists
The total addressable market is huge. MacDonald estimates there are about 1.5 billion people worldwide who are actively learning to speak English.
Duolingo's generative AI-powered subscription service is called Duolingo Max.
"Duolingo Max (is) only scratching the surface of opening up new opportunities for learners and monetization," MacDonald said.
In the third quarter, Duolingo had 37.2 million total daily active users, up 54% year over year.
Duolingo offers instruction in more than 40 different languages on its freemium service. Popular languages to learn through Duolingo include English, Spanish, French and Japanese. Its free service is supported by advertising while its paid subscription service is ad-free.
Duolingo stock is on two IBD stock lists: IBD 50 and Tech Leaders.
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