Duolingo Inc. (NASDAQ:DUOL) stock fell nearly 8% on Friday as investors appeared to lock in profits following Thursday’s gains. A broader risk-off mood also weighed on growth stocks, adding to the selling pressure.
The Nasdaq fell 0.31%, while the S&P 500 slipped 0.17%. The Consumer Discretionary sector was nearly flat, down 0.05%.
Duolingo’s sharp decline compared with the broader sector suggests stock-specific selling played a larger role in Friday’s move.
Animade Acquisition Puts Design In Focus
Duolingo stock had gained Thursday after the company announced its acquisition of London-based animation studio Animade. The company acquired Animade to expand its Design Studio and strengthen its motion design capabilities.
“Great products aren’t defined only by what they do, but by how they make people feel,” Mig Reyes, head of design at Duolingo, said in the announcement.
Friday’s decline followed that rally, with investors appearing to lock in gains amid weaker sentiment toward higher-beta growth stocks.
Duolingo Stock Underperforms Sector
Duolingo was down sharply even as the Consumer Discretionary sector slipped just 0.05%. The stock underperformed the sector by roughly 7.5 percentage points.
Market breadth remained relatively constructive, with seven of 11 sectors advancing and an advance-decline ratio of 1.8.
However, investors showed signs of moving toward more defensive areas of the market. Energy gained 1.44%, while Utilities rose 0.62%.
That rotation created a tougher backdrop for growth-oriented consumer internet stocks such as Duolingo.
Duolingo Technical Picture Remains Mixed
Duolingo remains above its short-term moving averages despite Friday’s selloff.
The stock was 0.5% above its 20-day simple moving average of $132.50. It was also 4.2% above its 50-day average of $127.72.
However, shares remained 3.1% below the 200-day moving average of $137.34. That level could serve as resistance as the stock attempts to rebuild its longer-term trend.
The 20-day moving average remains above the 50-day average, signaling stronger short-term momentum. However, the 50-day average remains below the 200-day average.
Duolingo’s relative strength index stood at 51.51. That reading is considered neutral and suggests the stock is neither overbought nor oversold.
The stock has fallen 59.63% over the past 12 months, leaving it vulnerable to selling as investors use rebounds to exit positions.
Traders may watch $135 as a potential resistance level. On the downside, $117 could serve as a key support area.
Analyst Outlook
Duolingo carries a Hold consensus rating with an average price forecast of $117.20. Recent analyst moves include:
Wells Fargo maintained an Underweight rating on Aug. 7 and lowered its price forecast to $80. DA Davidson maintained a Neutral rating on Aug. 6 and raised its price forecast to $130. UBS maintained a Buy rating and raised its price forecast to $150 on Aug. 6.
Benzinga Edge Rankings
Duolingo’s Benzinga Edge rankings show a strong growth profile but weaker momentum.
The company has a Growth score of 95.93. Its Value score stands at 55.21, while its Momentum score is 33.07.
The rankings suggest growth remains Duolingo’s strongest factor. However, the weaker momentum reading highlights the selling pressure surrounding the stock.
DUOL Price Action
Duolingo shares were down 7.55% at $133.22 at the time of publication Friday, according to Benzinga Pro.
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