Duolingo, Inc. (DUOL) saw its stock plummet 5.05% in pre-market trading on Tuesday, despite reporting an "outstanding record quarter" during its Q4 2024 earnings call on February 27th. The language learning platform highlighted several positive developments, including:

- Significant user growth, with daily active users surging 51% year-over-year to 40 million.
- Strong adoption of its AI-powered premium subscription tier, Duolingo Max, which now represents 5% of total subscribers.
- Increased content generation capacity through AI, enabling faster expansion into new languages and subjects like Math and Music.

However, the company also acknowledged that the investment in Duolingo Max would temporarily impact gross margins by 170 basis points in 2025, with margins expected to improve in the second half of the year as AI costs are optimized. Additionally, while the Family Plan offering now comprises 23% of subscribers and offers higher retention and lifetime value, the company's guidance for 2025 bookings growth of 25% year-over-year at the midpoint (27% on a constant currency basis) may have fallen short of investor expectations.