Citron Research has issued a critical assessment of Duolingo Inc. (NASDAQ: DUOL), acknowledging the company's success in building an interactive language learning app that has experienced unprecedented user growth, partly driven by its use of TikTok. However, Citron warns that the stock is trading at unsustainable valuation levels, with a forward sales multiple of approximately 15x and a FY2026 EBITDA multiple exceeding 40x. These valuations suggest that investors are expecting aggressive growth and flawless execution, which Citron views as unrealistic. The firm compares Duolingo to Chegg, describing it as a "slow moving Chegg," and highlights that Duolingo’s GPT-powered offering, "Max," is currently used by only 0.4% of users, with projections of just 2.5% penetration by 2029. Citron also points out that ChatGPT can replicate Duolingo lessons more efficiently and for free, posing a competitive threat that undermines Duolingo's moat. Additionally, Morgan Stanley has noted that Duolingo will eventually need to transition from a user growth story to a profit story, though this is not expected soon. Citron concludes that despite having a good product for now, Duolingo’s stock is overvalued, trading at higher multiples than companies like Datadog (DDOG) and Snowflake (SNOW).