Duolingo

23% wiped off a share price in one afternoon.

The same quarter, the company posted its best bookings in history.

Duolingo the company that made learning addictive just chose to make its own addiction less profitable.

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Luis von Ahn built Duolingo around one habit: open the app, do a lesson, keep your streak going.

When growth slowed in 2023, he pushed harder to make money instead. Ads after every lesson became one of Duolingo's biggest moneymakers.

Most people still saw a company making more money than ever.

But every ad he added was pushing users away and his own data proved it.

By the end of 2025, user growth had fallen from 49% to 30% in a single year, the sharpest slowdown in the company's history.

Von Ahn had two years of his own data proving the ads were hurting growth.

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Then on 26 February 2026, von Ahn stood in front of investors and reversed course himself. Duolingo would pull back on ads and prompts to pay and put the free app first, even if it meant a weaker year of bookings.

Within the hour, one bank cut its price target. Six more followed by morning and the stock fell 23%.

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The numbers (2026 forecast):

→ Bookings, the money customers pay: $335m in Q4 2025, up 24% from last year

→ Full year 2025 bookings: over $1bn for the first time

→ User growth: down from 49% to 30% across 2025

→ 2026 bookings growth forecast: 11%, down from near 20% the year before

→ Share price: down 23% in after hours trading and down about 67% over the past year

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The playbook?

1. Less pressure on free users

→ Ads and prompts to pay got more aggressive every year since 2023.

→ Von Ahn is pulling that back so people stick around instead of leaving.

→ The goal is a free app that feels like a gift again, not a paywall.

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2. Growth before profit

→ Bookings growth is guided down to 11%, about half last year's pace.

→ He is betting that more users today is worth more than more money per user right now.

→ He put the bad news into his own forecast instead of waiting for the market to find it.

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3. A bigger base to sell to later

→ Von Ahn has said he wants Duolingo to reach 100 million daily users.

→ The plan is, that a much bigger user base can support more money later, even if this year looks weaker.

→ Wall Street didn't wait to see if the plan works. It cut the stock 23% before he had the chance.

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Von Ahn's bet is simple. Grow the user base back toward 100 million people, then start charging again without losing them.

He is trading a weaker 2026 for a bigger business later. He hasn't proven it works yet. The market marked the stock down 23% before he got the chance.

But the plan isn't a mystery. Von Ahn thinks a bigger habit today is worth more than a smaller, more profitable one right now.

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I write about this kind of thing every week in Three Exits.

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