Time To Buy The Dip In Duolingo Stock?

DUOL: Duolingo logo
DUOL
Duolingo

Duolingo stock has fallen by 21.7% in less than a month, from levels of $486.02 on 6/10/2025 to $380.44 now. Should you buy this dip? Dip buying is a viable strategy for quality stocks when broad market conditions are favorable, provided that the stock has a history of recovering from dips.

As it turns out, not only does Duolingo pass basic fundamental quality checks, but it has also returned (on average) 95% in one year, and 109% as peak return following sharp dips (>30% in 30 days) historically. That said, if you seek upside with lower volatility than individual stocks, the Trefis High Quality portfolio presents an alternative – having outperformed the S&P 500 and generated returns exceeding 91% since its inception.

Historical Median Returns Post Dips

 

Period Past Median Return
1M 20.1%
3M 28.8%
6M 36.0%
12M 105.8%

Historical Dip-Wise Details

DUOL had 4 events since 1/1/2020 where the dip threshold of -30% within 30 days was triggered

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  • 111% median peak return within 1 year of dip event
  • 360 days is the median time to peak return after a dip event
  • -7.5% median max drawdown within 1 year of dip event

 

30 Day Dip DUOL Subsequent Performance
Date DUOL SPY 1Y Peak
Return
Max
Drop
# Days
to Peak
Median 106% 111% -7% 360
11162022 -31% 5% 200% 210% -7% 363
5112022 -35% -15% 125% 134% 0% 364
3152022 -32% -5% 87% 87% -8% 356
11242021 -33% 8% -42% 2% -47% 2

Duolingo Passes Basic Financial Quality Checks

Revenue growth, profitability, cash flow, and balance sheet strength need to be evaluated to reduce the risk of a dip being the sign of a deteriorating business situation.

Quality Metrics Value Quality Check
Revenue Growth (LTM) 39.1% Pass
Revenue Growth (3-Yr Avg) 43.2% Pass
Operating Cash Flow Margin (LTM) 37.9% Pass

Dip buying, while attractive, needs to be evaluated carefully from multiple angles. Such multi-factor analysis is exactly how we construct Trefis portfolio strategies. If you want upside with a smoother ride than an individual stock, consider the High Quality portfolio, which has outperformed the S&P, and clocked >91% returns since inception.