Arthedge Capital Doubles Down on Duolingo Stock, Adds Another $7 Million

What happened

According to a recent SEC filing dated Feb. 17, 2026, Arthedge Capital Management, LLC increased its stake in Duolingo, Inc. (DUOL +0.42%) by 30,500 shares. The estimated transaction value for this buy is approximately $7.19 million, based on the mean unadjusted closing price for the quarter ended Dec. 31, 2025. The quarter-end value of the position declined by $1.13 million, reflecting both share activity and underlying price changes.

What else to know

This buy brings Duolingo to 8.6% of Arthedge Capital’s 13F reportable assets under management as of Dec. 31, 2025.

• Top holdings after the filing:
  • Global-e Online: $26.30 million (19.2% of AUM)
  • Shopify: $23.60 million (17.2% of AUM)
  • Amazon: $20.74 million (15.1% of AUM)
  • Duolingo: $13.13 million (9.3% of AUM)
  • Crowdstrike: $12.53 million (9.1% of AUM)

As of March 4, 2026, Duolingo shares were priced at $96.17, down 67.4% over the prior year, underperforming the S&P 500 by 85 percentage points.

Company overview

Company snapshot

Duolingo:

• Offers a digital language-learning platform and mobile app, covering 40 languages and including a language proficiency assessment exam.
• Targets individuals seeking language acquisition, including students, professionals, and global learners in the United States, China, and other international markets.
• Has headquarters in Pittsburgh, Pennsylvania, with a global user base and a focus on technology-driven education solutions.

Duolingo, Inc. operates at scale in the digital education sector, leveraging technology to deliver accessible language learning worldwide. The company’s strategy centers on product innovation, user engagement, and expanding its course offerings to maintain a leading position in the language-learning market. Its competitive edge lies in a robust platform, data-driven personalization, and a global user base.

What this transaction means for investors

Arthedge Capital’s purchase of Duolingo is worth monitoring for several reasons. First, the firm typically holds its positions for years at a time, which aligns with Foolish principles. Second, Arthedge has more than doubled its Duolingo stock over the last two quarters, while the stock has been in an 81% freefall. I like the vote of confidence from them, even as the market continues to question what stocks AI will disrupt, causing mayhem among many software and app stocks.

Lastly, Duolingo stock itself is starting to get really interesting. The company’s daily active users (DAUs) just grew by 30% to cross the 50 million-user mark, yet the stock is being punished as though it were going out of business. While growth has slowed somewhat, I think most of the stock’s decline comes from it previously being priced for perfection – trading above 30 times sales in 2025 – before plummeting to 5 times sales amid the AI-induced sell-off and decelerating growth rates.

Management hopes to hit 100 DAUs by 2028, but expects revenue growth to slow to 15% to 18% in 2026, as the company aims to improve its free experience rather than relying on ads and other “friction” tactics to nudge users into a subscription. I like this short-term tradeoff for its potential long-term benefits (not to mention a better user experience for free users), but this is also part of the reason the stock’s price is down. Currently trading at just 22 times free cash flow after accounting for stock-based compensation, Duolingo’s double-digit growth, immense growth optionality, and reasonable valuation might have me making a few small buys over time. I’ll be curious to see if Arthedge doubles down on DUOL stock again in the upcoming quarter.