I Just Bought $10,000 of a NEW Stock

Quick Overview

The speaker purchased $10,000 worth of Duolingo (DUOL) stock because its business model, strong financial metrics (like 23% YoY revenue growth and 72% CAGR in Book Value since 2019), excellent gamification, and AI-first strategy involving its custom Ironwood chips present a compelling long-term investment opportunity, despite current market sentiment being "Too Hard" on PayPal (PYPL).

Key Points: The speaker invested $10,000 in Duolingo (DUOL), making it the third stock purchased in 2024 after Nike and Robinhood. Duolingo exhibits a strong 'Learning flywheel' powered by AI/ML, resulting in greater efficacy and engagement, and a corresponding 'Investment flywheel' fueled by more paid subscribers. Financial strength is evident with 23% YoY revenue growth and a 72% CAGR in Book Value since 2019 (09:45). The company's commitment to becoming a proficiency standard is highlighted by the Duolingo English Test (DET) acceptance by over 6,000 programs, including 97 of the top 100 U.S. universities. The CEO's focus is shifting towards higher-margin revenue (branded checkout, PayPal stablecoin) and away from low-margin volume, signaling confidence that the equity is undervalued (14:18). The speaker contrasts this with PayPal, which is struggling with margin dilution and competitive pressure from Apple Pay and others (13:33). The video briefly covers the AI chip landscape, noting that Google (with TPUs) and AWS (with Trainium) are developing their own silicon, challenging Nvidia's dominance (17:33).

Context: The video analyzes the investment thesis for Duolingo (DUOL) stock, contrasting it with recent negative news surrounding PayPal (PYPL) and highlighting the technological advantage of Duolingo's AI-driven learning platform. The speaker uses data from the Flank investing platform to support his decision to buy $10,000 of DUOL stock, focusing on its compounding growth, strong balance sheet, and superior execution compared to struggling competitors.

Detailed Analysis

The speaker announces buying $10,000 of Duolingo (DUOL) stock, the third purchase in 2024. The primary reason for buying is Duolingo's superior business model, which is built around a powerful flywheel effect. This learning flywheel, driven by more learners, generates more data and insights, which feed back into improving efficacy and engagement, leading to more learners and paid subscribers, which in turn funds more investment in the platform (05:33). The speaker notes that Duolingo's CEO, Luis von Ahn, is transparent with shareholders, contrasting with the negative sentiment around PayPal (PYPL) (07:09). Financially, Duolingo shows excellent growth, with revenue up 23% YoY and a 72% CAGR in Book Value since 2019 (09:45). The balance sheet is strong, showing $747M in cash and equivalents in 2023 against only $248M in deferred revenue (10:01). The company is also establishing itself as a proficiency standard by having its Duolingo English Test (DET) accepted by many top US universities (06:33). In contrast, PayPal is struggling with margin dilution and competitive pressure, causing its stock to fall over 70% from highs (13:33). The video also touches on the AI chip war, noting that Google (with Ironwood TPUs) and AWS (with Trainium) are competing with Nvidia's dominant GPUs, suggesting that relying solely on external suppliers like Nvidia might be a risk for hyperscalers (17:33). The speaker concludes that Duolingo's strong fundamentals and AI-driven experimentation make it a great long-term hold.