UBS believes that language education platform Duolingo has the potential for further growth through artificial intelligence (AI) integration and higher subscription prices. Analyst Chris Kuntarich initiated coverage of Duolingo with a buy rating and set a price target of $195 per share. This implies a potential increase of over 26% from Duolingo’s closing price of $154.24 on Wednesday. Kuntarich highlighted Duolingo as a “best-in-class brand” that still has room to expand its user base. The company could leverage AI-driven content creation to boost engagement and payer penetration, aiming for a 29% compound annual growth rate over the next two years.
The analyst also expressed optimism about Duolingo’s future subscriber monetization opportunities, particularly through its family plan and premium “Max” tier subscription. Kuntarich estimated that Family Plans, which accounted for 12% of subscribers as of fiscal year 2022, and Max subscriptions could collectively make up a significant percentage of net subscribers in the next two years. Furthermore, UBS sees potential for Duolingo to raise prices in its Family Plan and Duolingo English Test offerings, as they may be undervalued compared to other consumer internet subscriptions.
Duolingo’s stock has experienced substantial growth this year, surging by nearly 117%. Since going public in July 2021, the company’s shares have risen over 50%, reflecting investor confidence in its future prospects. With UBS’ positive outlook on Duolingo’s AI integration and subscription pricing strategies, the company may continue to attract more users and deliver strong financial performance in the coming years.
