Matt Lindsay

Next week we’ll be sharing some of our work on Duolingo $DUOL, one of the more interesting setups we’re seeing this year. At today’s valuation, a positive outcome seems very likely unless the business is completely falling apart, the product is getting worse, and management doesn’t know how to monetize without breaking engagement. That appears to be the opposite of what the fundamentals and underlying data reveal. The market didn't want to pay 50x FCF for 25–30% revenue growth in a consumer app. Fair enough. But sub-10x for a business that can still grow 20%+, with massive operating leverage and phenomenal unit economics, suggests the market is now extrapolating an intentional strategy shift and monetization pause as permanent deceleration. It feels somewhat similar to $NFLX in Q2 2015 and Q2 2016. Not because the businesses are the same, but because the market may be misreading short-term friction while missing the longer-term setup. After Q2 2016, Netflix posted six consecutive quarters of strong subscriber additions, culminating in a blowout Q4 2017. The stock tripled over the following 18 months. $DUOL's strategy shift is not without risk. But since IPO, management has been clear about operating with a long-term mindset and building durable value.

And with that, I've just shared some thoughts at the link in bio about the current offshore set-up, my basket approach, and an interesting microcap driller that I've been adding to over the last month $NOL.OL $TDW $RIG $VAL $NE $SDRL