Duolingo rises after CEO defends “AI-first” strategy in NY Times interview
Despite customer backlash to AI focus, analysts see Duolingo on track for steady growth as it rolls out new features and expands into music.
Shares of Duolingo jumped over 7% Monday morning after the company’s CEO defended its use of AI amid customer backlash.
In an interview with The New York Times published Sunday, founder and CEO Luis von Ahn said the language-learning company was still hiring employees at the same rate as before he directed the app’s workers to focus on AI.
Von Ahn said that using AI and automation in the language-learning process would in fact reduce the barriers to learning a new language, because “95 percent of people don’t want to talk to another person in a language that they are not very comfortable with. The emotional energy is just too high. The nice thing is, you don’t feel judged by a computer.”
Wall Street also gave the company’s shares a boost, as KeyBanc analysts upgraded the stock to “overweight” (buy) from “sector weight” and hiked their price target to $600 from $390 — a massive 70% jump from current trading levels.
While the company has faced backlash in recent months for becoming an “AI-first” platform, a move that displaced some human language teachers, analysts dismissed the controversy as “a bump in the road,” pointing instead to Duolingo’s strong margins, the rollout of its Energy feature, and the upcoming September Duocon update as drivers of future growth.
Separately, Citi also initiated coverage on the stock with a “buy” rating and a $400 price target, calling Duolingo firmly rooted in the online learning space.
Earlier this month, Duolingo shares climbed on Q2 results that topped estimates and came with a raised full-year sales forecast. The company also announced it had acquired the team behind NextBeat, a London-based music gaming startup, to fuel expansion into music education.
Duolingo shares are now up 9% year to date.
