Wells Fargo Initiates 'Underweight' on Duolingo, Citing Decelerating User Growth and Revenue Risks

The brokerage noted a deceleration in daily active user growth to 40% in Q2 from 48% in Q1, with projections for continued weakness. Analysts anticipate subscriber numbers to be 10% below Wall Street forecasts and expect Duolingo's revenue and profit in 2027 to be 5-6% lower than consensus estimates.

The report highlights issues such as muted engagement on social media, user pushback on app changes like the 'Hearts' to 'Energy' system conversion, and slower adoption of the premium 'Max' tier. Wells Fargo believes it will be increasingly difficult to convert free users to paid subscriptions in 2026 and 2027, impacting future revenue per user.