Morgan Stanley analysts expressed tactical caution regarding Duolingo. They anticipate the company's initial fiscal 2026 bookings guidance may fall short of expectations. This caution stems from Duolingo's focus on user growth over immediate monetization, which could pressure near-term forecasts despite strong daily active user growth.
The firm issued the note ahead of Duolingo's fourth-quarter earnings report, scheduled for February 26.
Separately, the options market saw a surge in bearish sentiment. Reports on February 4 indicated significant activity in put contracts. The Put/Call Ratio reached 1.63, suggesting a stronger bearish outlook among traders ahead of the earnings announcement.