--- title: "Duolingo's own A/B tests are the witness in a securities suit over its growth story" description: "A Michigan police and fire pension fund alleges Duolingo's own A/B tests, experiments comparing versions of the app on different users, showed friction and fast AI content shrinking daily active user growth while executives called it sustainable. The DAU rate has since turned back up, and that recovery is the part no court will decide." publisher: "The Inference" section: "Platforms" published: 2026-10-12T13:17:53.979Z modified: 2026-10-12T13:17:53.979Z canonical: https://theinference.org/article/duolingo-s-own-a-b-tests-are-the-witness-in-a-securities-suit-over-its-growth-story language: en keywords: "Securities Litigation, Duolingo, Class Action, User Growth, EdTech" --- # Duolingo's own A/B tests are the witness in a securities suit over its growth story > A Michigan police and fire pension fund alleges Duolingo's own A/B tests, experiments comparing versions of the app on different users, showed friction and fast AI content shrinking daily active user growth while executives called it sustainable. The DAU rate has since turned back up, and that recovery is the part no court will decide. ## The charge: growth sold as sustainable Robbins Geller [announced the class action on October 9](https://www.businesswire.com/news/home/20261009119987/en/) for buyers of [Duolingo](https://theinference.org/markets/companies/duolingo) Class A stock between May 2, 2025, and February 26, 2026; lead plaintiff motions, the deadline for class members to ask the court to run the case, close on December 7 [9][1]. The plaintiff, the City of Dearborn Heights police and fire retirement system, names chief executive Luis von Ahn and former chief financial officer Matthew Skaruppa, and no court has ruled on any of it [2]. At about $150 the shares still trade near 44 times next-year earnings on a $7 billion market value, so the growth story, not the lawsuit, is what holders own [7]. ## Energy drained when users got answers right In April 2025 Duolingo replaced Hearts, which charged wrong answers, with Energy, which drains on correct ones [2]. [The complaint says](https://www.investmentnews.com/regulation-legal-compliance/pension-fund-accuses-duolingo-of-burying-user-growth-crisis/268542) the goal was "to create friction for free users to try and force them into becoming paid subscribers", while that quarter's shareholder letter called Energy "a carrot, not a stick" [2]. More ads, pricier upsells and [quickly generated AI lessons](https://theinference.org/article/a-pension-fund-sues-duolingo-over-ai-course-content-as-the-founder-sells-42-million-of-stock) came next, and the company ran "thousands" of A/B tests, experiments comparing versions of app features on different users, which the complaint says showed the friction suppressing user growth [2]. Per the complaint, von Ahn put it plainly on February 26, 2026: "the quickest way to increase monetization was basically by adding friction" [2]. ## Three disclosures, three drops The deceleration came clean in steps. DAU growth fell from 49% in Q1 2025 to 36% by Q3, and the stock fell 25% to $193.74 on November 5, 2025, as management reversed the push [1][8]. On January 12, 2026 Skaruppa's resignation arrived with [preliminary Q4 growth of about 30%](https://www.sec.gov/Archives/edgar/data/1562088/000162828026001730/duol-20260108.htm), and the stock fell 8.5% to $161.74 [1][2]. Board member Gillian Munson took the CFO seat on February 23, and the filing says neither officer left over disagreements [5]. On February 26 Duolingo [guided 2026 to about 20% DAU growth and 10–12% bookings growth](https://www.sec.gov/Archives/edgar/data/1562088/000162828026012246/q4fy25duolingo12-31x25pres.htm), against the roughly 20% bookings analysts expected, and the stock fell 14% to close at $101 [1][2]. *Chart: **Three disclosures, three single-session drops of 9 to 25 percent** Range chart of Duolingo's share price at the close before and after each of three disclosures: November 5, 2025, falling from $258 to $194; January 12, 2026, from $177 to $162; and February 26, 2026, from $117 to $101.* *Closing share price immediately before and after each disclosure. Pre-disclosure closes are derived from the reported percentage drops and the closing prices on the disclosure days. Sources: Robbins Geller case page; InvestmentNews, 8 October 2026. [1][2]* *Chart: **DAU growth halved in a year, then stopped falling at 23%** Line chart of Duolingo's year-over-year daily active user growth by quarter, falling from 49% in Q1 2025 to 30% in Q4 2025 and 21% in Q1 2026, then ticking up to 23% in Q2 2026, with a reference line at 20% for 2026 guidance.* *Year-over-year DAU growth by quarter. Q4 2025 as preliminarily disclosed on January 12, 2026; Q1 2026 derived from Duolingo's statement that Q2 2026 growth accelerated two points sequentially. Sources: Robbins Geller case page; Duolingo Q2 2026 shareholder letter, SEC filing of August 5, 2026. [1][3]* ## The repair is showing in the user number Since the pivot, the funnel has started growing again on the company's own numbers. [Q2 2026 DAU growth was 23%, two points above Q1 and ahead of plan](https://www.sec.gov/Archives/edgar/data/1562088/000162828026053299/q2fy26duolingo6-30x26share.htm), helped by product changes, marketing and a one-time June event that revived streaks for 15.4 million learners [3]. Duolingo now expects DAU growth above 20% for the rest of the year, has raised its full-year adjusted EBITDA margin outlook to about 26.5%, and aims monetization work at "ways to increase revenue without adding friction to free users" [3]. Revenue is the cost: growth has slowed from 41% to 18% year over year since mid-2025 [6]. 2025 still finished above 50 million DAUs and $1 billion in bookings, with a $400 million buyback authorized [4]. ## What the court cannot settle The suit has to prove what executives knew: that the test results showed the harm while the public line called growth sustainable [2]. At around $150, between the $101 February close and the $344 high, that bet rests on the recovery outliving the one-time streak fix [7]. Lead plaintiff motions close on December 7; the next DAU print arrives well before any ruling [1][3]. ## Takeaway The securities suit against Duolingo leans on its own A/B tests as evidence that friction and fast AI content held growth back; the DAU rate has since recovered to 23%, and whether that repair is durable is the bet the court will not decide. ## Sources 1. [Robbins Geller Rudman & Dowd LLP, case page: Duolingo, Inc. Class Action Lawsuit, retrieved 12 October 2026](https://www.rgrdlaw.com/cases-duolingo-inc-class-action-lawsuit-duol.html) 2. [InvestmentNews, Pension fund accuses Duolingo of burying user-growth crisis, 8 October 2026](https://www.investmentnews.com/regulation-legal-compliance/pension-fund-accuses-duolingo-of-burying-user-growth-crisis/268542) 3. [Duolingo, Q2 2026 shareholder letter, Exhibit 99.2 to Form 8-K, filed 5 August 2026](https://www.sec.gov/Archives/edgar/data/1562088/000162828026053299/q2fy26duolingo6-30x26share.htm) 4. [Duolingo, Q4 and full year 2025 results press release, Exhibit 99.1 to Form 8-K, filed 26 February 2026](https://www.sec.gov/Archives/edgar/data/1562088/000162828026012246/q4fy25duolingo12-31x25pres.htm) 5. [Duolingo, Form 8-K on CFO transition and preliminary Q4 2025 operating metrics, filed 12 January 2026](https://www.sec.gov/Archives/edgar/data/1562088/000162828026001730/duol-20260108.htm) 6. [Duolingo, quarterly figures from its SEC filings, retrieved 12 October 2026](https://www.sec.gov/cgi-bin/browse-edgar?action=getcompany&CIK=0001562088) 7. [Ainvest, Duolingo's Class Action Lawsuit Points to One Number: The Growth Rate That Fell from 49% to 20%, 12 October 2026](https://www.ainvest.com/news/duolingo-class-action-lawsuit-points-number-growth-rate-fell-49-20-2610/) 8. [MarketScreener, Robbins Geller Rudman & Dowd LLP Files Class Action Lawsuit Against Duolingo, Inc., 12 October 2026](https://www.marketscreener.com/news/duol-robbins-geller-rudman-dowd-llp-files-class-action-lawsuit-against-duolingo-inc-and-announce-ce785ddfd08ef523) 9. [BusinessWire, DUOL Investor Alert: Robbins Geller Files Class Action Lawsuit Against Duolingo, Inc., 9 October 2026](https://www.businesswire.com/news/home/20261009119987/en/) --- Duolingo's own A/B tests are the witness in a securities suit over its growth story — The Inference. Canonical: https://theinference.org/article/duolingo-s-own-a-b-tests-are-the-witness-in-a-securities-suit-over-its-growth-story