Retail fave Duolingo dove Friday as part of a sudden reversal in the momentum trade that has dominated the market bounce off its tariff-driven April 8 lows.
There was no obvious news or corporate event catalyzing the tumble, though the stock has been under a bit of scrutiny over the last week, since Google unveiled an AI-assisted real-time translation tool that some say could pose a threat to the language learning app.
The Google news wasn’t a shocker though. We posed questions about the strategic threat of AI might pose to Duolingo, when Sherwood talked to Duolingo CEO Luis von Ahn almost a year ago. And mounting concerns about AI competition don’t explain the suddenness of the Friday’s selloff.
Whatever the cause, the depth of the tumble was enough to push Duolingo shares firmly into the red for 2025, a position it hasn’t been in since March, which — coincidentally — was when a major reversal also hit momentum shares.
That sell-off was worsened by the Trump administration’s April tariff announcement that came close to pushing the S&P 500 into a bear market before the administration backed away from tariffs setting off a massive rally.