# Duolingo's Stock Down 38%, Plummets After OpenAI's GPT-5 Language App-Building Demo
robot (spnet, 1) → All – 19:22:01 2025-08-17
Duolingo's stock peaked at $529.05 on May 16th. Three months later, it's down 38% — with that drop starting shortly after backlash to the CEO's promise to make it an "AI-first" company.
Yet "The backlash against Duolingo going 'AI-first' didn't even matter," TechCrunch wrote August 7th, noting Duolingo's stock price surged almost 30% overnight. That surge vanished within two days — and instead of a 30% surge, Duolingo now shows a 5% drop over the last eight days.
Yahoo Finace blames the turnaround on OpenAI's GPT-5 demo, "which demonstrated, among many other things, its ability to create a language-learning tool from a short prompt."
OpenAI researcher Yann Dubois asked the model to create an app to help his partner learn French. And in a few minutes GPT-5 churned out several iterations, with flashcards, a progress tracker, and even a simple snake-style game with a French twist, a mouse and cheese variation to learn new vocab....
[Duolingo's] corporate lawyers, of course, did warn against this in its annual 10-K, albeit in boilerplate language. Tucked into the risk factors section, Duolingo notes, "It is possible that a new product could gain rapid scale at the expense of existing brands through harnessing a new technology (such as generative AI)." Consider this another warning to anyone making software. [The article adds later that "Rapid development and fierce competition can leave firms suddenly behind — perceived as under threat, inferior, or obsolete — from every iteration of OpenAI's models and from the moves of other influential AI players..."]
There's also irony in the wild swings. Part of Duolingo's successful quarter stemmed from the business's efficient use of AI. Gross margins, the company said, outperformed management expectations due to lower AI costs. And AI conversational features have become part of the company's learning tools, helping achieve double-digit subscriber growth... But the enthusiasm for AI, which led to the initial stock bump this week, also led to the clawback. AI giveth and taketh away.
In a new interview today with the New York Times, Duolingo's CEO emphasized his hope that AI would only reduce its use of contractors. "We've never laid off any full-time employees. We don't plan to...." But:
In the next five years, people's jobs will probably change. We're seeing it with many of our engineers. They may not be doing some rote tasks anymore. What will probably happen is that one person will be able to accomplish more, rather than having fewer people.
NYT: How are you managing that transition for employees?
Every Friday morning, we have this thing: It's a bad acronym, f-r-A-I-days. I don't know how to pronounce it. Those mornings, we let each team experiment on how to get more efficient to use A.I.
Yesterday there was also a new announcement from attorneys at Pomerantz LLP, which calls itself "the oldest law firm in the world dedicated to representing the rights of defrauded investors."
The firm announced it was investigating "whether Duolingo and certain of its officers and/or directors have engaged in securities fraud or other unlawful business practices."
[ Read more of this story ]( https://yro.slashdot.org/story/25/08/17/194212/duolingos-stock-down-38-plummets-after-openais-gpt-5-language-app-building-demo?utm_source=atom1.0moreanon&utm_medium=feed ) at Slashdot.
robot (spnet, 1) → All – 19:22:01 2025-08-17
Duolingo's stock peaked at $529.05 on May 16th. Three months later, it's down 38% — with that drop starting shortly after backlash to the CEO's promise to make it an "AI-first" company.
Yet "The backlash against Duolingo going 'AI-first' didn't even matter," TechCrunch wrote August 7th, noting Duolingo's stock price surged almost 30% overnight. That surge vanished within two days — and instead of a 30% surge, Duolingo now shows a 5% drop over the last eight days.
Yahoo Finace blames the turnaround on OpenAI's GPT-5 demo, "which demonstrated, among many other things, its ability to create a language-learning tool from a short prompt."
OpenAI researcher Yann Dubois asked the model to create an app to help his partner learn French. And in a few minutes GPT-5 churned out several iterations, with flashcards, a progress tracker, and even a simple snake-style game with a French twist, a mouse and cheese variation to learn new vocab....
[Duolingo's] corporate lawyers, of course, did warn against this in its annual 10-K, albeit in boilerplate language. Tucked into the risk factors section, Duolingo notes, "It is possible that a new product could gain rapid scale at the expense of existing brands through harnessing a new technology (such as generative AI)." Consider this another warning to anyone making software. [The article adds later that "Rapid development and fierce competition can leave firms suddenly behind — perceived as under threat, inferior, or obsolete — from every iteration of OpenAI's models and from the moves of other influential AI players..."]
There's also irony in the wild swings. Part of Duolingo's successful quarter stemmed from the business's efficient use of AI. Gross margins, the company said, outperformed management expectations due to lower AI costs. And AI conversational features have become part of the company's learning tools, helping achieve double-digit subscriber growth... But the enthusiasm for AI, which led to the initial stock bump this week, also led to the clawback. AI giveth and taketh away.
In a new interview today with the New York Times, Duolingo's CEO emphasized his hope that AI would only reduce its use of contractors. "We've never laid off any full-time employees. We don't plan to...." But:
In the next five years, people's jobs will probably change. We're seeing it with many of our engineers. They may not be doing some rote tasks anymore. What will probably happen is that one person will be able to accomplish more, rather than having fewer people.
NYT: How are you managing that transition for employees?
Every Friday morning, we have this thing: It's a bad acronym, f-r-A-I-days. I don't know how to pronounce it. Those mornings, we let each team experiment on how to get more efficient to use A.I.
Yesterday there was also a new announcement from attorneys at Pomerantz LLP, which calls itself "the oldest law firm in the world dedicated to representing the rights of defrauded investors."
The firm announced it was investigating "whether Duolingo and certain of its officers and/or directors have engaged in securities fraud or other unlawful business practices."
[ Read more of this story ]( https://yro.slashdot.org/story/25/08/17/194212/duolingos-stock-down-38-plummets-after-openais-gpt-5-language-app-building-demo?utm_source=atom1.0moreanon&utm_medium=feed ) at Slashdot.