Buffett Brain · Research note
Score updated 27 Oct 2026 · analysis from 13 Aug 2026
DUOL· Technology
Duolingo
Duolingo's 72% gross margin is impressive, but its low ROIC and inconsistent profitability raise concerns about long-term durability.
Buffett fit
Weak fit
Owner
38
Durability
62
Management
41
Price
67
Score updated 27 Oct 2026 · analysis from 13 Aug 2026
Buffett's checklist
Each number against Buffett's bar, and where it ranks among Technology stocks in our database.
How much profit the business makes on each dollar invested in it. Higher is better.
What is left of each sale after the cost of making the product. A high number often means pricing power.
The cash the business earns for its owners, compared with the price of the whole company.
How fast sales grew each year over the last five years.
How many years of today's profit you pay for at today's price. Lower means cheaper.
How much the company owes compared with what it owns outright. Lower is safer.
The four pillars
How the business measures up on each of Buffett's four tests.
If I owned Duolingo, I would focus on maintaining its strong while ensuring consistent profitability.
The full reasoning comes with a free account.
Duolingo has shown potential with a revenue CAGR of 42.62%, but its low of 10.9% is below the sector's top-quintile cutoff of 13.4%.
The full reasoning comes with a free account.
Management has not demonstrated strong discipline, with a share count CAGR of 4.58% and a yield of just 0.03%.
The full reasoning comes with a free account.
The current yield of 7.5% is below my target of 8-10%, but the of 11.7 is reasonable.
The full reasoning comes with a free account.
Free account
Read the full Duolingo analysis free
- The full reasoning behind all four pillars
- The 5-year price target and the return it implies
- What would change the call
- Graham, Lynch and Greenblatt on the same stock
3 full analyses a week · no card needed
For and against
The strongest points on each side, with the numbers behind them.
In its favor
5- 172.1% is well above the sector's top-quintile cutoff of 60.6%.
- 2Revenue of $1.04B shows strong demand for its language-learning platform.
- 3 of $369.73M indicates potential for reinvestment.
- 4Net margin of 38.4% ranks in the top quintile for its sector.
Concerns
5- 1 of 10.9% is below the sector top-quintile cutoff of 13.4%, indicating weak capital efficiency.
- 2Inconsistent profitability, as the company has not been profitable for all of the last five years.
- 3Share count CAGR of 4.58% signals potential dilution of ownership.
- 4Negative market cap versus retained earnings ratio of -0.85 suggests poor .
Price history
$139-20.2%· 5-year return
Weekly closing prices. Touch or hover the line for a date.
The business
How the business works
Duolingo generates revenue primarily through its language-learning platform, which boasts a of 72.1%. The company offers courses in 40 languages and has expanded its user base significantly, achieving a revenue of $1.04B. Its unit economics suggest a strong demand for its services, although profitability has been inconsistent.
How this analysis has moved
The call has held across 6 reviews.
Sep 27, 2026 → Oct 27, 2026
What other investors would say
The same company, judged by three other documented playbooks.
Keep researching
Similar companies in Technology
Free weekly email
Liked the read on DUOL? Get the next ones on Monday.
Every Monday: the stocks most of the seven investors newly agree on. One email, unsubscribe any time.
Research, not investment advice.
See the Buffett analysis of Duolingo
The score, the checklist and the full reasoning open with a free account. You get 3 full analyses a week, and this stock is the first one. No card needed.
Create a free account3 full analyses a week · no card needed
Already have an account? Sign in