Luis von Ahn's Strategic Shift Drives Duolingo Stock Down 23.6% in January

When a high-growth tech company fundamentally alters its playbook, markets often react with skepticism—and that’s precisely what happened to Duolingo in January 2026. The stock retreated 23.6% during the month, marking the continuation of a decline that began in 2025. While the surface narrative points to slowing subscriber growth amid economic uncertainty, the deeper story involves CEO Luis von Ahn’s deliberate recalibration of priorities and a significant leadership transition that rattled investor confidence.

The turmoil reflects a tension between two competing visions for Duolingo’s future. For years, the company optimized ruthlessly for profitability and monetization. Then, in November 2025, Luis von Ahn signaled a meaningful shift: the company would prioritize subscriber growth and teaching quality over near-term earnings expansion. This wasn’t an abandonment of profit-seeking, but rather a strategic reallocation of resources toward expansion-focused initiatives. To investors accustomed to the company’s profit-first approach, this announcement felt like a jarring reversal.

The CFO Exit Adds Fuel to the Fire

The market turbulence intensified on January 8 when CFO Matt Skaruppa announced his departure after six years in the C-suite. The announcement arrived alongside mixed guidance: Daily Active Users (DAUs) would slightly miss November’s targets, while bookings would exceed prior guidance. In a fragile economic environment where consumers hesitate to invest in self-improvement products like language learning, this mixed signal compounded concerns about execution under the new strategy.

The combination of Luis von Ahn’s growth-oriented pivot and Skaruppa’s exit created an air of uncertainty. Investors worried not just about near-term results, but about whether management had the stability and alignment to execute a strategic transformation.

Reframing the Selloff: A Valuation Reset

Yet for patient investors, the sharp decline presents a contrasting perspective. As of mid-February 2026, Duolingo’s stock has plummeted 67% over the past year, trading at just 15.3 times trailing earnings. For context, this valuation is the most affordable since the company’s 2021 IPO—a striking reset for a company delivering roughly 40% year-over-year revenue growth consistently.

The financial foundation remains robust. Duolingo maintains a 40% net profit margin over the trailing four quarters and generated $355 million in free cash flow against $964 million in revenue during the same period. These metrics reveal a company that generates cash efficiently even as it redirects resources toward growth initiatives.

The stock’s 23.6% January decline, when combined with the broader year-long selloff, has erased the valuation premium that once made Duolingo appear expensive. Under Luis von Ahn’s new mandate, the company is reinvesting freed capital into subscriber acquisition and product quality—investments that the current market price fails to reflect. For investors with multi-year time horizons, this pullback resembles a rare window for entry into a business with durable competitive advantages and expanding addressable markets.