How many languages can you say “initial public offering” in? Popular language-learning app Duolingo is moving closer to its IPO, announcing its starting price at $85 to $95 per share. The tech company will offer about 5.1 million shares, which would raise over $485 million.
The Demand for Online Educational Apps
Online education tools saw a dramatic spike in interest during the COVID-19 pandemic. Duolingo alone now has more than 500 million downloads and estimates 40 million active users per month. The app’s 1.8 million paid subscribers contributed over 72% of the company’s revenue so far this year, while another 17% of earnings came from advertising. The company reported that it more than doubled its revenue during the first quarter of 2021.
What is Duolingo?
Founded in 2011, Duolingo boasts 40 different languages including Irish and Hawaiian—the app claims that there are more online learners for these languages than there are native speakers! Overall, Duolingo dominates the category of educational apps as the top-grosser for both Apple and Google Play.
Previous to its plans to go public, Duolingo’s biggest fundraising round was its Series D in 2015, which brought in $45 million. The tech giant’s most recent round of funding (a Series H in November 2020) valued the company at about $2.4 billion.
Could There be a Supply Increase in Educational Companies IPOs?
Duolingo’s foray into the stock market prompts analysts to wonder if other educational technology companies will follow. In this extraordinarily active season for IPOs, companies from every sector have been looking to benefit from the momentum. Smaller businesses may not have the same name recognition as tech giants, but they may offer lesser-known investment benefits.
For example, qualified small business stock (QSBS) offers the unique perk of up to 100% exemption from federal capital gains tax. Since evolving tax laws have been a hot topic on a national and state level, investors would be wise to consider partnering with smaller companies before they become news-headline-level names.
This article does not constitute legal or tax advice. Please consult with your legal or tax advisor with respect to your particular circumstance.