Duolingo Stock Drops 17.6% in July

Shrinking Monthly Active Users Contributed to Sell-Off

Key Takeaways:

• Duolingo's stock price plummeted 17.6% in July 2023.
• The decline was primarily driven by a decrease in monthly active users (MAUs).
• Competition from established players and language learning fatigue may have also contributed to the sell-off.

Shares of app-based education company Duolingo (NASDAQ: DUOL) experienced a significant decline in July, dropping 17.6% according to data from S&P Global Market Intelligence.

The primary factor behind the sell-off was a decrease in Duolingo's monthly active users (MAUs). The company reported a decline of 5% in its MAUs, from 54.1 million in May to 51.2 million in June. This marks the second consecutive month of declining MAUs for Duolingo.

Several factors may have contributed to the decrease in MAUs, including increased competition from established players such as Rosetta Stone and Babbel, as well as language learning fatigue. The market for language learning apps has become increasingly saturated in recent years, and users may be becoming less interested in learning new languages through apps.

In addition to the decline in MAUs, Duolingo has also been facing challenges monetizing its user base. The company relies on a combination of advertising revenue and subscription fees, but it has struggled to convert free users into paying subscribers. As a result, Duolingo's revenue growth has slowed in recent quarters.

The sell-off in Duolingo's stock is a reminder of the challenges facing the online education industry. While there is still a large market for language learning apps, companies like Duolingo need to find ways to differentiate themselves from the competition and effectively monetize their user base.

References:

• Why Duolingo Stock Sank Nearly 18% Last Month (The Motley Fool)
• Duolingo Stock Tumbles After Lowering 2023 Revenue Forecast (S&P Global Market Intelligence)