By George Glover

Duolingo stock was plummeting on Friday after the educational technology company said it would sacrifice near-term revenue growth to focus on boosting its user base.

Shares tumbled 23% to $90.76 ahead of the opening bell. Futures tracking the S&P 500 were 0.2% lower, as investors carried on ditching risk assets.

Duolingo said in a fourth-quarter earnings report filed after Thursday's close that its medium-term goal was to reach 100 million daily active users by 2028, having passed the 50 million level in 2025. User growth decelerated last year.

To reach its target, Duolingo said it would prioritize user numbers over near-term revenue growth. It added that it would scale back some monetization initiatives to boost "top-of-funnel user growth."

For the current quarter, the company expects revenue of $288.5 million, below the $291.4 million that analysts polled by FactSet were expecting.

"Management believes that a portion of the deceleration in user growth over the course of 2025 could be attributed to the push to monetize, which in turn led to disgruntled users and a meaningful negative impact to 'word-of-mouth' marketing," D.A. Davidson analyst Wyatt Swanson, who rates the stock at Neutral, wrote in a research note.

"This guidance for 2026 is meant to fix that issue through an abundance of experimentation and reduced friction for users to have a better experience," he added, cutting his price target to $85 from $170.

The consensus on Wall Street was that the short-term pain could be worth it if Duolingo does manage to boost its user base.

"While we believe this is the right long-term move, the near-term effect is clear," KeyBanc analyst Justin Patterson, who rates the stock at Sector Weight, said.

The soft revenue guidance overshadowed a fourth-quarter earnings and revenue beat.

Duolingo reported adjusted earnings before interest, taxes, depreciation, and amortization, or Ebitda, of $84.3 billion, as revenue jumped 35% to $282.9 billion. Wall Street was looking for adjusted Ebitda of $78.1 billion on revenue of $276 billion.

Write to George Glover at george.glover@dowjones.com

This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.

(END) Dow Jones Newswires

February 27, 2026 05:49 ET (10:49 GMT)

Copyright (c) 2026 Dow Jones & Company, Inc.