Duolingo Inc (NASDAQ:DUOL) just delivered another masterclass in keeping learners hooked, and Wall Street is taking notes. Shares surged as much as 7% on Thursday, and JPMorgan's Bryan M. Smilek sees plenty of upside, reiterating an Overweight rating and a $400 price target.

Enter Lily: Video Calls & AI = A Winning Formula

Read Also: Duolingo And Netflix Bring Squid Game Fans Closer To Korean with New Language Challenge

Duolingo Max, the company's GenAI-driven premium tier, is also gaining traction. Smilek estimates Max subscriptions will jump from 450,00 in 2024 to 1.37 million in 2025, generating $153 million this year—nearly one-fifth of subscription revenue. A well-timed New Year's campaign offering 20% off Max has further sweetened the deal for language learners looking to level up.

US-Based Chinese Learners Surge – But Why?

Adding another twist to the story is an unexpected surge in U.S.-based Chinese learners, up 216% year-over-year. Speculation swirls around RedNote, a Chinese learning app some see as a TikTok alternative amid potential U.S. bans.

However, Smilek isn't buying RedNote as a game-changer for Duolingo. Instead, he points to seasonal trends—New Year's resolutions and the upcoming Chinese New Year on Jan. 29 – along with Duolingo's own marketing firepower, which has seen impressions rise 80% over the past year.

A Strong Growth Trajectory

With daily active users projected to grow 37% in 2025, Duolingo is proving that when it comes to language learning, engagement is the real currency.

And with AI-driven tutoring gaining steam, Duolingo's $400 price target might just be another milestone in its upward trajectory.

Price Check: Shares of DUOL finished 6.8% higher at $341.80 on Thursday.

Read Next:

• Meta’s ‘Community Notes’ To Exempt Paid Ads, Marketers Left Puzzled About Organic Content Risks: Report

Photo: Shutterstock