Is Duolingo, Inc. overvalued or undervalued?

As of 17 October 2025, the valuation grade for Duolingo, Inc. has moved from expensive to very expensive, indicating a significant deterioration in its valuation outlook. The company appears to be overvalued based on its current metrics, with a P/E ratio of 239, a Price to Book Value of 26.09, and an EV to EBITDA of 268.26. In comparison to peers, monday.com Ltd. has a P/E of 242.18, while SPS Commerce, Inc. shows a more reasonable P/E of 52.78, highlighting the relative overvaluation of Duolingo.
Despite a strong 3-year return of 272.78%, which significantly outpaces the S&P 500's 81.19%, the current valuation ratios suggest that the stock may not be justified at its price level. The company’s high valuation metrics, coupled with a recent downgrade in its valuation grade, reinforce the conclusion that Duolingo is overvalued in the current market environment.