Duolingo shares have seen a 38% crash: What's the reason?
What's the story
Duolingo, the leading name in education technology, has seen its stock plummet by a whopping 38% from its peak this summer. The massive sell-off was influenced by Wall Street's lukewarm response to Duolingo's AI-first ambitions. However, the primary driver behind the fall was the competition from OpenAI, one of the world's top artificial intelligence (AI) companies.
Game changer
GPT-5's capabilities challenge Duolingo's market position
The turning point came with the demonstration of OpenAI's GPT-5 model. Not only did it excel at conversation and translation, but it also created a fully functional language learning app from a single prompt in no time. The app featured flashcards, progress tracking, and even a simple educational game. This development made investors, developers, and analysts question Duolingo's unique selling proposition (USP).
Tech rivalry
Competition intensifies with Google's potential entry
The pressure on Duolingo is not only coming from OpenAI. Google is also said to be testing "AI-led features" in its Translate app, such as a practice mode and AI-generated language lessons. These features are similar to what Duolingo offers. If launched, Google's version could be pre-installed on billions of devices around the world, further intensifying the competition in this space.
Market impact
Can tech giants replicate language learning?
Despite Duolingo's successful use of AI in the past, the company's stock was not spared when OpenAI and Google made their moves. This raises questions about whether specialized language-learning platforms can survive when top AI companies can replicate similar features in no time. The rapid evolution of technology now poses a threat to existing players like Duolingo.