DUOL 0.00%↑ operates a highly popular language learning app by the same name, Duolingo. Recently, DUOL 0.00%↑ has expanded into several verticals like chess and math learning. However, investors have been discounting DUOL 0.00%↑ because of AI disruption fears.
For this analysis, I used an un-levered beta of 0.77 (consumer services industry) which was re-levered to 0.85 using the Hamada equation. In addition, I also used an ERP of 4.5% (for US equities), an effective tax rate of 6.00%, and a risk free rate of 3.76%.
Since the interest expenses are not available for DUOL 0.00%↑ on Stock Analysis and DUOL 0.00%↑ does not have 10 year bond rates, I searched for analyst’s estimates for the pre-tax cost of debt which is ~7.2% as of now. Now with those parameters out of the way, here is some information from the company’s investor presentations and earnings.
For their 2026 guidance, management describes several ranges for key metrics and I use the midpoint of those just like the other analysis I have done. Based on this, I used a 16.5% revenue growth rate and a 10.08% operating margin for Year 1.
