Key TakeawaysShares of Duolingo plummeted more than 20% following management’s decision to emphasize expanding its user base rather than maximizing immediate revenue.JPMorgan and BofA Securities both moved DUOL to Neutral ratings, with price targets falling sharply to $95 and $100 respectively.Management set an ambitious goal of reaching 100 million daily active users by 2028, acknowledging this will create near-term pressure on bookings and profitability.A $400 million share repurchase program was approved to provide support for the stock throughout this strategic transition period.Additional downgrades came from Morgan Stanley and Evercore ISI, with analysts expressing concern about growth deceleration and strategic direction.Duolingo (DUOL) experienced a brutal trading session on Friday. Shares plunged over 20% during early market hours, dropping to $90.76, as Wall Street reacted negatively to a significant change in the company’s strategic direction.Duolingo, Inc., DUOLCompany leadership revealed plans to dial back aggressive monetization tactics in order to prioritize expanding daily active users. Management is targeting 100 million daily active users by 2028, a substantial increase from today’s figures.This strategic announcement was paired with disappointing 2026 financial projections, creating the perfect storm for a massive selloff.Duolingo actually exceeded fourth quarter 2025 expectations, delivering $0.84 in earnings per share compared to the anticipated $0.83. Revenue reached $282.9 million, surpassing the $275.74 million estimate. However, investors were more concerned about future prospects than past performance.Over the previous two years, the language-learning platform had aggressively promoted subscription upgrades and increased ad impressions. While this strategy boosted profitability, it simultaneously degraded the experience for free users. Consequently, user acquisition began decelerating in the latter half of 2025.The company’s solution involves reducing monetization intensity. The application will focus on enhancing the free user experience, betting that satisfied users will organically promote the platform through word-of-mouth recommendations.Artificial intelligence capabilities such as “Video Call with Lily,” which were previously exclusive to paying subscribers, will become accessible to all users. However, this democratization carries higher operational costs that will compress profit margins temporarily.Wall Street Turns BearishJPMorgan analyst Bryan Smilek downgraded DUOL from Overweight to Neutral while slashing his price target from $200 down to $95. He pointed to the user-first approach as a catalyst for reduced bookings and margin compression, emphasizing that the investment payoff will require considerable time.BofA Securities analyst Omar Dessouky similarly downgraded shares from Buy to Neutral, reducing his target price from $250 to $100. His primary concern centered on Duolingo’s minimal advancement in performance marketing capabilities, with management indicating they’re unlikely to build this expertise internally.BofA characterized this as a strategic miscalculation, particularly considering the sophisticated ad targeting capabilities now available through platforms like AppLovin and Google. The investment bank stated that its original bullish investment thesis had been invalidated.Morgan Stanley dropped its rating from Overweight to Equalweight. Evercore ISI shifted from Outperform to In Line. KeyBanc maintained its Sector Weight stance.D.A. Davidson analyst Wyatt Swanson offered a more understanding perspective, noting that previous aggressive monetization approaches had created “disgruntled users and a meaningful negative impact to ‘word-of-mouth’ marketing.”Company Unveils Buyback ProgramTo provide price support during this strategic transformation, Duolingo announced authorization for a $400 million share repurchase program. This signals that management believes current share prices significantly undervalue the company.DUOL has declined approximately 69% over the trailing twelve months. The stock is now trading close to its 52-week low.According to TipRanks, the consensus analyst rating stands at Hold, comprised of five Buy ratings, 10 Hold ratings, and one Sell rating. The average twelve-month price target of $139.64 suggests approximately 49% potential upside from current trading levels.The $400 million buyback program remains in effect as Duolingo pursues its ambitious 2028 user base expansion objectives.The post DUOL Stock Plunges 20% Following Multiple Analyst Downgrades and Strategy Shift appeared first on Blockonomi.