Duolingo Faces Securities Class Action Over User Growth and AI Content Claims

What the lawsuit claims

The case is captioned City of Dearborn Heights Act 345 Police & Fire Retirement System v. Duolingo, Inc., No. 26-cv-02199, and is filed in the U.S. District Court for the Western District of Pennsylvania. It accuses Duolingo (NASDAQ: DUOL) and certain current and former executive officers of violating the Securities Exchange Act of 1934. The Class Period runs from May 2, 2025 to February 26, 2026, inclusive.

According to the complaint as described by Robbins Geller, the defendants made false or misleading statements, or failed to disclose, several things during that period:

• Daily Active User (DAU) growth was being leveraged against deliberately added user friction, including more ads, subscription tier upsells and worsened product quality, and the defendants understood that any friction would drive users away.
• Duolingo's A/B testing showed that more friction in the free user experience was hurting DAU growth.
• Quickly generated AI content was worsening the quality of the product, hurting the user experience and threatening the sustainability of financial performance.
• Constant A/B testing told the company that its monetization push and lower-quality, rapidly generated AI content were degrading the product and the value of its subscription tiers.

These are allegations made by the plaintiff and the law firm. They have not been proven in court.

The stock drops cited in the complaint

The release lays out three events that it says revealed the alleged problems to the market.

On November 5, 2025, Duolingo reported third quarter results showing another sequential decline in DAU growth, to 36%, down from 49% in the first quarter of 2025 and 40% in the second quarter. According to the release, the company also reversed its monetization push and said it would prioritize user growth over monetization, adding that it needed to invest more in "teaching better across all our subjects." The stock price fell 25% on this news.

On January 12, 2026, Duolingo announced that Chief Financial Officer Matthew Skaruppa, a named defendant, had resigned. It also gave limited, preliminary fourth quarter 2025 operating metrics showing DAU growth of only 30%, which the release describes as nearly six points of additional deceleration from the third quarter. The stock fell another 8.5%.

On February 26, 2026, Duolingo published fourth quarter 2025 results, confirmed the slowdown in DAU growth and, according to the release, revealed that the consequences of its strategy shift would have material negative impacts on 2026 bookings, DAU growth rates, revenue and adjusted EBITDA. The stock fell an additional 14%.

How the lead plaintiff process works

Under the Private Securities Litigation Reform Act of 1995, any investor who bought Duolingo Class A common stock during the Class Period may ask to be appointed lead plaintiff. The release says a lead plaintiff is generally the movant with the greatest financial interest in the relief sought by the putative class who is also typical and adequate of the class. The lead plaintiff directs the case on behalf of other class members and can choose the law firm that will litigate it.

Robbins Geller states that an investor's ability to share in any future recovery does not depend on serving as lead plaintiff. The firm lists attorneys Ken Dolitsky and Michael Albert as contacts and describes itself as ranked #1 on the most recent ISS Securities Class Action Services Top 50 Report, with more than $916 million recovered for investors in 2025.

What it means for investors and Duolingo

The deadline of December 7, 2026 is the key date for shareholders who bought during the Class Period and want a leading role in the case. Investors who do not apply can still take part in any recovery, according to the firm. The release does not report any response from Duolingo, and the claims remain allegations while the case is at an early stage.