Needham sees potential for Duolingo to spearhead the $115 billion language learning market

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  • Needham analyst Ryan MacDonald began coverage on Duolingo, Inc. DUO with a buy rating and price target of $115.
  • MacDonald acknowledges that DUOL is a leader in the language learning market, which HolonIQ values ​​at $49 billion and is expected to reach $115 billion by 2025 and notes that it is only 34% digital.
  • Its survey shows that DUOL has built industry-leading brand recognition with an amusing learning platform that attracts learners and generates stronger engagement than similar companies in the ed-tech space.
  • Healthy engagement creates multiple monetization opportunities for DUOL through subscriptions, advertising, and in-app purchases.
  • MacDonald believes the company will leverage these growth channels to generate “rule of 40” fundamentals over the next 3-5 years.
  • Paid subscribers represent only 6% of MAUs, which represents a significant opportunity for conversion. The company’s latest family plan is a second lever to keep the company’s annual subscription revenue growth above 30%.
  • He expects the company’s Duolingo English test to propel market share gains and DUOL to increase growth by expanding its platform into literacy and math.
  • Price action: DUOL shares traded up 2.70% at $99.57 when last checked on Thursday.
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