Duolingo Undervalued Amid Revenue Multiples Shift

about 1 month ago

"Now if we look at Dolingo's valuation it was trading at 160 times earnings and now trading at 50 times earnings. This is GAAP earnings by the way, while Non-GAAP is about 27 times. I believe we should be looking at a price to sales ratio for Dualingo as the company is more focused on growth. Dualingo went from 22 times price to sales ratio to about seven times. I even talked about it myself, but seven times for me is very compelling for a company growing revenues at high rates. So my thesis on Dualingo is that the stock is undervalued here, much better valued than it was a few months ago."

The speaker highlights a dramatic change in valuation for Duolingo, noting a decline in earnings multiples from 160x to 50x and a significant reduction in the price-to-sales ratio from 22x to 7x. He argues that despite the apparent risk from slowing revenue growth, the focus on growth makes the current valuation compelling and undervalued compared to a few months ago.

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