Duolingo Appears Undervalued Despite Selloff

3 months ago

"Now in terms of my valuation model, I'm taking an extremely conservative valuation model. In my previous video, I put up 30% for 2026 and 25 2020 and I use 30P. I got $582 per share upside potential over the next 5 years. And this one, I'm going to be even more conservative and I'm going to use 30% 2515 to account for a potential deceleration in earnings Porsche growth. Although the company could be much more profitable than it is, they have insane gross margins. So if they want to really expand profitability, they can do it and I believe that will likely be conservative. The current PE ratio is actually around 30 times earnings as of the selloff around 30 times. I took it down to 25 times earnings as I believe the company will have much higher margins in the future."

The speaker outlines a conservative valuation model for Duolingo, suggesting significant upside potential despite the 20% after-hours drop. By lowering the PE ratio assumption from 30 to 25, he indicates that the stock could offer over 100% upside over the next 5 years, making it an attractive long-term opportunity even after a temporary deceleration in quarterly growth.

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