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Duolingo Inc.’s shares fell as much as 22% on February 27 after the company said its push to gain subscribers would lead to slower earnings growth and narrower profit margins in the short term.
Duolingo said it will increase investment in artificial intelligence and accept some reduction in monetization to accelerate user growth and engagement. The company’s stated goal is to double its current number of daily active users to 100 million by 2028.
Chief Executive Officer Luis von Ahn said in a letter to shareholders that the short-term effect would be weaker financial performance, adding: “The short-term implication is that this year will see slower bookings growth and lower profitability.”
The company reported that daily active users grew at the slowest pace in four years, rising 30% in the quarter from a year earlier.
Duolingo also forecast first-quarter adjusted EBITDA of $73.6 million, below analyst estimates of $84 million.
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