Jefferies advised investors to be selective with Duolingo, maintaining a 'Hold' rating in its "2026 Internet Playbook" report. The firm cautioned that continued heavy spending on growth initiatives could squeeze profit margins.
Furthermore, the report raised structural concerns. It noted that artificial intelligence might disintermediate traditional internet services, posing a long-term threat to platforms like Duolingo and potentially limiting stock valuation growth.
This analysis follows Jefferies raising its price target on December 11, 2025, to $220 from $210. The report acknowledges Duolingo’s strong fundamentals, citing significant user growth in Q3 2025 and successful expansion into new areas like Chess. Despite these strengths, the forward-looking commentary emphasizes potential headwinds for the upcoming year.