Is Duolingo, Inc. overvalued or undervalued?

As of 17 October 2025, the valuation grade for Duolingo, Inc. moved from expensive to very expensive, indicating a significant increase in perceived overvaluation. The company is overvalued, as reflected by its high P/E ratio of 239, a Price to Book Value of 26.09, and an EV to EBITDA ratio of 268.26. In comparison, monday.com Ltd. has a P/E of 242.18 and an EV to EBITDA of -8060.67, while SPS Commerce, Inc. shows a more reasonable P/E of 52.78 and an EV to EBITDA of 27.68, highlighting the disparity in valuation metrics among peers.
Despite a strong 3-year return of 272.78% compared to the S&P 500's 81.19%, the recent performance shows a decline of 0.3% over the past week against a 1.70% gain in the S&P 500, reinforcing the notion that Duolingo's current valuation may not be sustainable in the long term.