Wells Fargo has started coverage of Duolingo (NASDAQ:DUOL) with an Underweight rating and a $239 price target, cautioning that decelerating user growth and declining brand appeal could pressure the language-learning app’s outlook.
The brokerage highlighted that daily active user growth dropped to 40% in the second quarter, down from 48% in the first quarter, with alternative metrics suggesting continued softness in the third quarter.
“We believe user growth issues are likely persistent and as a result see downside to 2027 estimates,” the analysts said, adding that subscriber numbers are expected to come in roughly 10% below Wall Street forecasts.
Wells Fargo noted that last year’s negative buzz around artificial intelligence has morphed into broader “apathy on the Duolingo brand,” which has dampened marketing effectiveness.
Engagement on the company’s U.S. TikTok account has remained low, and recent app changes have drawn criticism. Switching from the “Hearts” system to “Energy” cut free play credits, while five-star app store reviews fell from 60% at the end of 2024 to around 30% currently.
The analysts also pointed out that converting free users to paid subscribers has become increasingly challenging. Meanwhile, Duolingo’s premium “Max” tier, launched in 2023, has seen adoption slow after an initial surge, limiting potential growth in average revenue per user.
“We expect it will be more difficult to push users out of the free experience in 2026 / 2027,” Wells Fargo said, forecasting that Duolingo’s 2027 revenue and profit could land 5% to 6% below consensus estimates.
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