Duolingo: one who already controls the user is not probably disrupted by AI

The other way around I want to start thinking about a company from the non-numerical fundamentals like moat and business model and then reason what price would be a good deal for that specific company. In Duolingo’s case I have to do this another way around since the business and it’s current valuation are both looking attractive. On the other hand, I do think there’s a real edge in making a reasonable assumption about AI’s role in the economy over the coming years, and more specifically, how it affects the app layer like SaaS and consumer applications. Well, like everyone knows, all Dualingo's metrics are straight up and to the right. Many of these KPIs are growing over 40 % per year or more and the only thing that seems to move down is the stock price. The reason is that the company is suffering from brutal revaluation driven by the AI narrative which has hit similar companies. Putting everything on the DCF calculation we get an intrinsic value of $206 per share with 10 % annual growth. This, by the way, represents almost 10 percent upside so many investors probably think that we haven’t seen the worst for Duolingo just yet. To me, the valuation already bakes in the biggest risks. If this company grows only 10 % per year I simply think that it is a failure. However from an investment view I don’t have much downside. What I think is valuable Duolingo has already proved itself. It has acquired 50 million daily active users and it’s growing pretty fast. Furthermore they have constantly proven that they can get more paying customers from active users. Those simply are the abilities that only quality companies have. Despite other investors seeming to think the opposite, I think AI is going to help Duolingo a lot. We simply haven’t seen the full circle of the AI renaissance just yet and I think what’s coming from the other side of a tunnel looks great. First, I highly believe that there’s this whole layer of companies, I like to call it, an app layer where there’s already a proven interface that users simply love to use and which is backed by rising metrics. Connecting AI to this layer, I believe, will bring huge upside for this company when Duolingo is improving its capabilities to create content, expand & give users phenomenal powers when interacting with AI. Moats simply aren’t destroyed by a chat interface. Is it a buy? I don’t view Duolingo as a valuation play. I view it as a quality compounder where the market is currently pricing in a structural risk that I believe is overstated. If AI ends up strengthening engagement and monetization, which I believe is the more likely outcome, the current valuation leaves room for attractive long-term returns with controlled risk.