Duolingo speaks the language of Wall Street: Stocks zoom higher after IPO

The shares of Duolingo Inc. rose more than 38% on Wednesday after the language tutorial apps company priced its IPO much higher than its original forecast.

Duolingo DUOL,
+36.28%
shares opened at $141 on the Nasdaq on Wednesday, after pricing at $102 late Tuesday, pushing the valuation above $5 billion. The price of the language learning program was above the expected range of $95 to $100 per share, which had already been increased from the original estimate of $85 to $95 per share.

For more: Duolingo, the fast-growing language learning app, files for IPO

Duolingo planned to sell 5.1 million shares in the offering, but will only receive the proceeds of the sale of 3.7 million, so the company would receive approximately $377.4 million of the total $520.2 raised. million. At $102 a share, the company had a valuation of at least $3.7 billion with 35.8 million shares outstanding.

The Pittsburgh-based company offers a “freemium” service where most of its users don’t pay for its offerings, a mobile-centric software approach to foreign language learning. The company said its revenue more than doubled to $161.7 million in 2020 from $70.8 million in 2019. In the quarter ended March 31, the company reported revenue of $55.4 million, compared to $28. 1 million in the same period a year ago.

The offering includes Class A Shares, which are worth one vote per share, while early investors hold Class B Shares, which are worth 20 votes each. Of the class B shareholders, NewView Capital will have 20.8% voting rights after the offering. The co-founders, Chief Executive Luis von Ahn and Chief Technology Officer Severin Hacker, receive 15.3% and 15.2% of the vote respectively. CapitalG gets 12.7% of the vote, Union Square Ventures 11.7%, Kleiner Perkins 10.3% and General Atlantic 7.3%.

According to Crunchbase, the company has raised $183.3 million in venture capital since 2011.

Over the past 12 months, the Renaissance IPO ETF IPO,
+3.39%
gained 48%, compared to a 37% gain in the S&P 500 index SPX,
-0.02%
and a 42% rise in the tech-heavy Nasdaq Composite Index COMP,
+0.70%.

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