Duolingo (DUOL) Stock

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Contributor, Benzinga
September 3, 2021
Last update: 6:40PM (Delayed 15-Minutes)
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Vol / Avg.158.000 / 747.365KMkt Cap9.482B
Day Range- - -52 Wk Range116.820 - 245.870

As the language of global commerce and the internet is English, the responsibility lies on citizens of other nations to learn it, thus affording Americans hegemonic influence. However, as globalization further increases in scope, combined with the rise of emerging markets, U.S. citizens have both professional and personal incentives to learn another language.

That’s where Duolingo, an educational technology (EdTech) firm specializing in language-learning apps, comes into the picture. Commanding a high interest for its initial public offering (IPO) and subsequent public trading, here’s how you can get involved in the stock market and invest in educational technology, allowing this private company to become a public company with far greater scope than a mobile app.

Duolingo Financial History

According to analysis conducted by the Census Bureau for 2018, a total of 67.3 million U.S. residents spoke a language other than English at home, which represented a record. This bilingual demographic was equal to the entire population of France at that time. Still, it’s important to point out a caveat: On a percentage basis, as a Washington Post editorial noted, that’s only about 20% of American residents. Therefore, the U.S. lags in language skills against other countries on a per-capita basis. Potential investors, then, need to be aware of the fact that there could be some resistance to sustained growth in this sector.

Organically, though, this dynamic will bolster the case for DUOL stock long after the IPO. As globalization accelerates, Americans entering the workforce will find themselves competing not just with their compatriots but also against an international labor market — one that is highly educated and tech savvy. Native English speakers can no longer dependably rely on Anglo-American hegemony, which cynically supports DUOL. A wide range of people may need this app, but language science is often at the bottom of most to-do lists.

Better yet, Duolingo is not just a narrative play built on demographic trends and geopolitical assumptions. Instead, the EdTech firm tangibly enjoys the benefits of people throughout the world seeking to expand their linguistic horizons. Primarily, DUOL generated revenue of $161.7 million in 2020, up nearly 129% from the prior year’s tally of $70.8 million. Further, in the first quarter of this year, Duolingo rang up top-line sales of $55.4 million, almost doubling the year-ago quarter’s total.

On the flipside, prospective buyers should be aware that the company is not profitable, with a net loss of $15.8 million in 2020. However, this figure wasn’t that much worse off than 2019’s net loss of $13.6 million, while the sales haul last year was a significant lift. Presumably, as more people advantage Duolingo’s EdTech service, profitability should arrive down the road.

Duolingo Potential

For Duolingo to succeed, management must continue to build and market its powerful EdTech brand, making it the go-to name in learning a second language. If the execution is there, DUOL stock stands poised to deliver long-term gains. Mainly, Duolingo enjoys the red-carpet treatment as the underlying fundamentals are so powerful.

On a domestic scale, shifting demographics should prove a vigorous catalyst for DUOL stock for decades to come. According to a 2015 report by Spain-based nonprofit Instituto Cervantes, the U.S. at the time was the second-largest Spanish-speaking country. But by 2050, the U.S. will take the lead in this regard, with experts projecting a demographic of nearly 133 million Spanish speakers.

But the implications are even bigger for DUOL stock on the global scale. So, while English is the predominant language of the internet, Chinese is a close second. And this dynamic reflects in the economic power structure of the world. Currently, the U.S. is the world’s largest economy but that crown will likely not last forever. In fact, a BBC report indicated that China could overtake the U.S. by 2028, a pushed-up date from prior forecasts due to the COVID-19 impact.

As a whole, Americans and English-only speakers need to play catch-up to compete with an increasingly multilingual business environment. Fortunately, people are getting the message. As Duolingo’s dramatic revenue increase in 2020 demonstrated, many workers used their time off to learn a new language. As well, should remote work become the new norm, Americans will have even more incentive to pick up language skills to enhance their relevance.

How to Buy Duolingo (DUOL) Stock

Recently, Robinhood has been aggressively moving into the IPO space, allowing early access for CLEAR Secure (NYSE: YOU) and Figs (NYSE: FIGS). Since Duolingo has IPO’d, you might want to get into the stock now or look at other options that are out there.

If you already know how to buy stocks, you can jump right in. If not, just follow the steps below to learn how to access stock markets with ease.

Step 1: Pick a brokerage.

In prior generations, brokerages featured differing costs to the client. Today, the advent of multiple alternatives forced the underlying industry to standardize its financial incentives, such as commission-free trading. Therefore, you are now free to choose a platform that exclusively suits your needs and preferences.

Below is a list of best brokers to consider if you wish to buy for the first time or pile on additional shares of DUOL.

Step 2: Decide how many shares you want.

Sometimes an overlooked point, you will want to carefully decide your share count as it determines your risk-reward profile. Higher share counts enable greater accrual of profitability if the target stock rises in value. But the opposite is also true so give this final figure some thought.

Step 3: Choose your order type.

Before hitting the buy button, familiarize yourself with these concepts.

  • Bid: The bid is the maximum price a buyer will offer. It is always lower than the ask.
  • Ask: The ask is the minimum price that a seller will take. It is always higher than the bid.
  • Spread: The difference between the bid and ask, the spread also indicates market liquidity and risk. Narrower spreads suggest higher liquidity and lower risk due to buyer availability for sellers. In contrast, wider spreads suggest lower liquidity and higher risk.
  • Limit order: Use a limit order to trade stock at a specific price. Note that the market does not guarantee fulfillment of limit orders.
  • Market order: Use market orders to quickly buy shares at the current rate. Buy orders execute on the ask and sell orders on the bid.
  • Stop-loss order: A type of protective function for your portfolio, a stop-loss order exits your position at a predetermined (requested) price or the next available price, whichever comes first. Beware of gap-down sessions, which may cause your stop-loss order to fill well below your requested price.
  • Stop-limit order: To prevent unwanted surprises, use a stop-limit order to only allow automated exits to execute at a specific price. But if the target stock continues to decline, a stop-loss order would have been preferable.

Step 4: Execute your trade. 

To execute a market order, follow these steps:

  1. Select action type (buy or sell).
  2. Enter the shares you want to acquire (or sell).
  3. Hit the Buy (or Sell) button.

Apply the same steps for a limit order, except that you must enter your desired execution price.

Fluency in Profitability

While the U.S. improved dramatically over the years regarding the ability to speak another language other than English, on a per-capita basis, the nation has much further to go. For instance, 54% of Europeans are able to speak two languages, and a quarter can converse in at least two additional languages.

However, what America excels in is technology, with Duolingo being a key example. Through its fun, easy-to-navigate courses, it’s bridging the linguistic gap, making DUOL a compelling idea to consider.

About Joshua Enomoto

His distinct writing style of distilling convoluted data into relatable and compelling narratives has earned him recognition among several investment-related publications.