Duolingo, Inc.

(NASDAQ Global Select)
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Slightly Bearish -15

Duolingo (DUOL) vs Coursera (COUR): Which is a Better Stock to Buy?

Company update AI-generated analysis

πŸ“‰ Both Duolingo and Coursera have lost approximately 60% of their value over the past twelve months due to market fears regarding AI disruption.

πŸ’° Duolingo is profitable with an operating profit margin of 11.68% on $1.15 billion in revenue and holds $1.31 billion in cash.

πŸ“ˆ Coursera achieved a surprising 59.6% revenue growth rate, though it remains unprofitable with a net loss of $136.3 million.

πŸ“‰ Duolingo's earnings fell 26% year over year as its revenue growth slowed significantly to 18.3% in the last quarter.

πŸ’΅ Valuation compression is evident for Duolingo, which now trades near 18 times forward earnings compared to a previous high of over 200x.

πŸ›‘οΈ Coursera maintains a defensive balance sheet with $982.2 million in cash against less than $10 million in debt despite its losses.

πŸ€– The market views Duolingo as facing a more direct threat from AI technology compared to the enterprise-focused Coursera model.

πŸ“Š Hedge fund interest in Duolingo increased to 39 holders with a stake value of $760 million, while Coursera saw holdings drop to 27 funds worth $260 million.

Bullish Signals
  • Duolingo is currently profitable, converting 11.68% of its revenue into operating profit and returning 34.42% on equity.
  • The company holds a robust balance sheet with $1.31 billion in cash against only $86.14 million of debt, eliminating the need to raise capital.
  • Duolingo's valuation has compressed significantly to approximately 18 times forward earnings, making it no longer expensive compared to its historical levels.
Risk Factors
  • Revenue growth has slowed sharply to 18.3% in the most recent quarter, down from previous higher rates.
  • Earnings fell 26% year over year, contributing to a significant derating of the stock price.
  • The company faces a direct existential question regarding generative AI's impact on its consumer learning app model.
  • Shares traded at more than 200 times earnings in mid-2025 before correcting to current levels, indicating a major valuation reset.
Full Analysis
Duolingo, Inc. (NASDAQ:DUOL) and Coursera, Inc. (NYSE:COUR) have both experienced significant stock price declines of nearly 60% over the past year, driven by market concerns that generative AI could disrupt their core business models. Duolingo is currently the more profitable entity, converting 11.68% of its $1.15 billion revenue into operating profit and holding a strong balance sheet with $1.31 billion in cash against minimal debt. Despite its profitability, Duolingo faces challenges as its revenue growth has slowed to 18.3% in the most recent quarter while earnings fell 26% year over year. Consequently, its valuation has compressed from a peak of over 200 times earnings to approximately 18 times forward earnings. In contrast, Coursera reports much faster revenue growth at 59.6% but remains unprofitable with an operating margin of only 1.64% and a net loss of $136.3 million over the trailing twelve months. The article highlights a distinct divergence in investor propositions: Duolingo represents a high-quality business that has lost momentum and faces direct consumer-facing AI competition, while Coursera offers a cheaper valuation based on sales but carries the risk of slowing growth before achieving profitability. Hedge fund sentiment reflects this split, with 39 funds holding $760 million in Duolingo compared to 27 funds holding $260 million in Coursera as of Q2 2026.