As momentum trade fades, Duolingo drops into negative territory for the year

Retail fave Duolingo dove Friday as part of a sudden reversal in the momentum trade that has dominated the market after its tariff-driven April 8 lows.

There was no obvious news or corporate event catalyzing the tumble, though the stock has been under a bit of scrutiny over the last week, since Google unveiled an AI-assisted real-time translation tool that some say could pose a threat to the language-learning app.

The Google news wasn’t a shocker, though. We posed questions about the strategic threat AI might pose to Duolingo when Sherwood News talked to Duolingo CEO Luis von Ahn almost a year ago. And mounting concerns about AI competition don’t explain the suddenness of Friday’s sell-off.

Whatever the cause, the depth of the tumble was enough to push Duolingo shares firmly into the red for 2025, a position it hasn’t been in since March, which — coincidentally — was when a major reversal also hit momentum shares.

That sell-off was worsened by the Trump administration’s April tariff announcement, which came close to pushing the S&P 500 into a bear market before the administration backed away from tariffs, setting off a massive rally.