Duolingo (DUOL) Fair Value: $185

Q: What is Duolingo's fair value?

Under this scenario, Duolingo (DUOL) has a fair entry price of $185. This is the maximum you'd pay today to achieve your 10% target return over 5 years, given the growth assumptions. Different assumptions give different results, so use the calculator to model your own scenarios.

Q: Is DUOL undervalued right now?

Under these assumptions, Duolingo could be undervalued. The fair entry price ($185) is 20% above $153.70. If growth meets expectations, buying at $153.70 would yield 14.2%/yr. However, DCF doesn't predict what will happen. It shows what would need to happen for your target return. Always model multiple scenarios: optimistic, realistic, and pessimistic.

Fair value is $185 per share based on a 5-year DCF projection, 20% upside from the current price of $153.70.

Updated January 22, 2026 · Discounted Cash Flow Analysis

Current Price

$153.70

Jan 22 close

Fair Entry Price

$185

for 10% annual return

Projected Price

$298

by Jan 2031

Your CAGR

14.2%

if bought today

Operating Cash Flow grows from $363.9M → $713.4M over 5 years (15% → 13.6% annually)
How we calculated this

Price Projection

Assumptions Behind This Projection

Metric

Operating Cash Flow

Starting Growth

15%/yr

Growth Decay

2%/yr

Discount Rate

10%/yr

Projection Period

5 years

Terminal Multiple

25x

Shares Change

4%/yr

Dividend Growth

0%/yr

Adjust Growth Rate

See how assumptions change fair value

Growth

15%

Fair Value

$185

Conservative Optimistic

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Operating Cash Flow History & Projections

Historical data shows past performance. The green line projects forward from 15% growth, declining to 13.6% by year 5.

Current Operating Cash Flow

$363.9M

Projected 2031

$713.4M

This projection uses Operating Cash Flow. In the full calculator, you can project on 7 different metrics including EBITDA, Earnings, Operating Cash Flow, and more.

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How We Calculate Fair Value

DCF (Discounted Cash Flow) answers: "If this company keeps growing, what's the most I should pay today?"

Project future earnings

We take Duolingo's current Operating Cash Flow ($363.9M) and compound it at 15%/yr for 5 years. Growth decays by 2% each year (high growth rarely lasts forever). This growth rate is based on historical averages, and you can adjust it in the calculator.

Estimate future stock price

The projected Operating Cash Flow ($713.4M) divided by future shares (59.8M) gives us Operating Cash Flow per share. Multiply by a 25x valuation multiple = $298 stock price in 2031.

Discount to today's value

$298 in 5 years isn't worth $298 today. We discount it back at 10%/yr (your required return). We also add the present value of expected dividends over the period. Result: $185 fair entry price. This is the most you should pay today for your target return.

The Full Calculation (for the investing nerds)

Step 1: Project Operating Cash Flow

The most recent Operating Cash Flow is $363.9M
We project this out 5 years with 15% initial growth and 2% decay rate
Growth decay means the growth rate shrinks each year: Year 1 grows at 15%, then the rate is multiplied by (1 - 2/100) each subsequent year
After 5 years of decaying growth, Operating Cash Flow reaches $713.4M

Step 2: Project Diluted Shares Outstanding

Current shares outstanding: 49.1M
Shares change at 4%/yr (dilution increases share count)
After 5 years: 59.8M shares

Step 3: Calculate Future Stock Price

Formula: (Future Operating Cash Flow ÷ Future Shares) × Price Ratio
Calculation: ($713.4M ÷ 59.8M) × 25 = $298

Step 4: Discount to Present Value

Future stock price: $298
Discount rate (your required return): 10%/yr
Discounting back 5 years: $185 fair value today

DUOL trades at $153.70. Buying at that price would yield 14.2% annual return, which is above your 10% target.

Don't agree with these assumptions? That's the point. Use the calculator above to plug in your own growth rate, discount rate, and time horizon. More conservative? Lower the growth rate. Want a bigger safety margin? Increase the discount rate.

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Frequently Asked Questions

What is Duolingo's fair value?

Under this scenario, Duolingo (DUOL) has a fair entry price of $185. This is the maximum you'd pay today to achieve your 10% target return over 5 years, given the growth assumptions. Different assumptions give different results, so use the calculator to model your own scenarios.

Is DUOL undervalued right now?

Under these assumptions, Duolingo could be undervalued. The fair entry price ($185) is 20% above $153.70. If growth meets expectations, buying at $153.70 would yield 14.2%/yr. However, DCF doesn't predict what will happen. It shows what would need to happen for your target return. Always model multiple scenarios: optimistic, realistic, and pessimistic.

Why do investors use DCF analysis?

DCF helps investors determine what a stock is truly worth based on future earnings potential, rather than relying on market sentiment or analyst opinions. It answers: "Given my expectations for this company's growth, what's the maximum price I should pay today to achieve my target return?" Value investors like Warren Buffett use DCF-style thinking to find stocks trading below their intrinsic value.

How accurate is DCF analysis?

DCF is a framework for thinking about value, not a crystal ball. Small changes in growth rate or discount rate can dramatically change the result. That's actually the point: it helps you understand how sensitive a stock's value is to different scenarios. Run bull, bear, and base cases to see the range of possibilities.

What makes Stock Unlock's calculator different?

Our calculator pre-fills the latest financials so you can adjust every assumption and project forward 1-10 years. Choose from 7 valuation metrics: Free Cash Flow, Operating Cash Flow, Earnings, EBITDA, EBIT, Operating Income, or Book Value. Up to 35 years of historical data helps inform your growth rates. The model handles share dilution/buybacks and dividends automatically. Analyze any of 130,000+ stocks across 70+ global exchanges.

What discount rate should I use?

The discount rate is your required annual return. Most individual investors use 10%, which represents the historical average stock market return. If you want higher returns (to compensate for more risk), use a higher rate like 12-15%. Lower rates (8%) give higher fair values but require less upside. The discount rate isn't about the company. It's about your minimum acceptable return.

What's the difference between fair value and price target?

Analyst price targets predict where the stock price will go (usually 12 months out). DCF fair value tells you what to pay today to achieve a specific return over time. Price targets are often influenced by market sentiment; fair value is based purely on financial projections. Both are estimates, and neither is guaranteed.

Why use Operating Cash Flow instead of other metrics?

Different metrics suit different companies. We chose Operating Cash Flow for Duolingo as the primary measure to project. Our calculator lets you switch between Free Cash Flow, Earnings, EBITDA, and other metrics to see how the choice affects fair value. Different metrics can give very different results.

Disclaimer: This is not financial advice. DCF estimates depend on assumptions that may not reflect actual performance. Do your own research. Stock Unlock is not a brokerage.

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