Context
TDM Growth Partners is a long-only global investment firm with a mission to invest in and help scale businesses we are proud of. We invest in fast-growing businesses for the long term and have a concentrated portfolio – at any one time, we only hold investments in 10-15 companies. At the heart of every investment decision we make is the quality of the people and culture of the business. We are proud to have compounded capital at over 25% per annum since inception.
TDM is evaluating a potential investment in Duolingo (NASDAQ:DUOL). Duolingo is a leading mobile learning platform globally, offering language learning and literacy (and more recently, Maths). The company was perceived to be a ‘COVID-19 winner’ with user numbers surging as most of the world adhered to shelter-in-place orders. However, Duolingo has continued to execute coming out of the pandemic, growing both free and paid subscribers and reaching EBITDA profitability. This performance is reflected in the share price which is up +95% year-to-date.
As members of the TDM Investment Team, based on your research, would you recommend investing in Duolingo?
To frame the investment thesis, your presentation is expected to include:
- An overview of Duolingo;
- An assessment of Duolingo’s growth opportunity;
- An assessment of Duolingo’s competitive advantage and market positioning;
- An assessment of Duolingo’s management / people and culture;
- Valuation analysis;
- Key risks to the business and its valuation, and discussion of any mitigants.
