Why Duolingo stock has skyrocketed today


What happened

Duolingo‘s (NASDAQ: DUOL) the website and its foreign language learning app both crashed this morning, but the Duolingo stock did not. Instead of collapsing, Duolingo stock has skyrocketed and is up 10% as of 3:05 p.m. ET this afternoon.

Now why was that?

Image source: Getty Images.

So what

Based on data from Downdetector.com, Duolingo started having problems around 10:30 a.m.ET this morning. In the afternoon, these issues are still not resolved.

Normally, you would expect something like this to be bad news for a stock whose one and only product – language software – has been inaccessible to its millions of customers for most of the working day. But investors take a whole different direction from this event.

If you hit Twitter, you see, the reactions from Duolingo’s user base aren’t critical at all. On the contrary, they love …

and maybe a little panicked …

and look forward to seeing Duolingo come back online soon.

Now what

Why are Duolingo customers so forgiving? Perhaps this is because the light tone of Duolingo’s footage, lamenting the site’s being taken offline, tends to blunt critics. Or maybe it’s because the company doesn’t charge them a dime for its service, but distributes its language courses for free and makes up for the volume of ads sold and served to its users. (It turns out that you can buy a lot of customer loyalty with “free”.)

Whatever the reason, today’s outage for Duolingo revealed customers’ deep love for Duolingo and its product. While Duolingo is not yet a profitable business, this customer retention speaks volumes about the company’s growth prospects and suggests that the stock is on the right path to success.

This article represents the opinion of the author, who may disagree with the “official” recommendation position of a premium Motley Fool consulting service. We are motley! Challenging an investment thesis – even one of our own – helps us all to think critically about investing and make decisions that help us become smarter, happier, and richer.



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