A securities fraud class action lawsuit has been filed against Duolingo, Inc. (NASDAQ: DUOL) alleging that the company made materially false or misleading statements between May 2, 2025, and February 26, 2026. The complaint asserts that defendants failed to disclose that deliberate increases in ad volume, subscription upsells, and worsened product quality were intentionally used to leverage Daily Active User (DAU) growth rates, despite internal knowledge that such friction would drive users away. The lawsuit highlights a period of significant financial deterioration for Duolingo, Inc., marked by slowing user growth and strategic retreats. Following the announcement in November 2025 that DAU growth slowed to 36% and the company prioritized user growth over monetization, the stock price dropped 25.49%. Subsequent disclosures of a CFO resignation in January 2026 and further slowing metrics led to an additional 8.45% decline. In February 2026, Duolingo, Inc. confirmed that its strategic shift toward monetization and reliance on AI-generated content was materially harming its financial performance, including bookings, revenue, and adjusted EBITDA. This news triggered a further 14.01% stock drop. The plaintiffs allege that the company's positive public statements regarding business prospects lacked a reasonable basis given these internal findings of product degradation and user churn caused by friction. The case is currently pending certification in the U.S. District Court for the Western District of Pennsylvania, with a deadline of December 7, 2026, for investors to file motions to serve as lead plaintiff. The firm representing the plaintiffs argues that Duolingo's A/B testing demonstrated that increased friction negatively impacted user trends and threatened the sustainability of its financial model.