Shares of Duolingo (DUOL) plummeted 29.27% in Thursday's trading session, as investors reacted negatively to the language learning platform's weaker-than-expected fourth-quarter bookings forecast, despite strong third-quarter results.

Duolingo reported better-than-anticipated Q3 earnings, with revenue reaching $271.7 million, surpassing analyst estimates of $260.3 million. The company also raised its full-year 2025 revenue guidance to a range of $1.028 billion to $1.032 billion. However, the positive results were overshadowed by a softer Q4 bookings forecast of $329.5 million to $335.5 million, falling short of Wall Street expectations of $343.6 million.

CEO Luis von Ahn indicated a strategic shift in the company's focus, stating, "We remain focused on monetization, but the balance is shifting slightly. We're investing more aggressively in teaching quality relative to recent periods." This pivot towards prioritizing user growth and teaching quality over short-term monetization appears to have spooked investors, leading to the sharp sell-off. The market reaction suggests that expectations for Duolingo's growth trajectory may have been higher than the company's current strategy implies.

In response to the earnings report, several analysts have cut their price targets for Duolingo. JP Morgan lowered its target to $300 from $465, while maintaining an "overweight" rating. Similarly, Scotiabank reduced its price target to $300 from $600, and Needham cut its target to $300 from $460. The series of downgrades reflects growing concerns about Duolingo's near-term growth prospects and profitability in light of its strategic shift.