Is Duolingo, Inc. overvalued or undervalued?

As of 10 September 2025, the valuation grade for Duolingo, Inc. has moved from expensive to very expensive, indicating a significant shift in its valuation outlook. The company appears to be overvalued, with a P/E ratio of 239, a Price to Book Value of 26.09, and an EV to EBITDA ratio of 268.26, all of which are substantially higher than typical industry benchmarks.
In comparison to peers, Duolingo's P/E ratio is notably higher than monday.com Ltd. at 242.18 and SPS Commerce, Inc. at 52.78, suggesting that the market may be pricing Duolingo at a premium that is not justified by its financial performance. Additionally, while Duolingo has shown a 15.76% return over the past year, it has underperformed relative to the S&P 500's 17.14% return, reinforcing the notion that its current valuation may not be sustainable.