Shares of Duolingo, Inc. (DUOL) surged 5.10% in intraday trading on Wednesday, as investors appear to be recognizing the language learning platform's potential for growth and its current undervaluation. The stock's movement comes amid a broader market recovery and increasing interest in AI-driven education technology companies.

Recent analysis suggests that Duolingo may be significantly undervalued, with its current trading price of $288.81 falling well below the estimated fair value of $431.9 based on discounted cash flow projections. This represents a potential 33.1% discount, which could be driving investor interest. The company's strong financial performance in 2024, with annual earnings skyrocketing to $88.57 million from $16.07 million in the previous year, has likely contributed to the positive sentiment.

Looking ahead, Duolingo's growth prospects appear robust. The company has projected revenue for 2025 to be between $962.5 million and $978.5 million, signaling continued expansion that outpaces the broader U.S. market growth rate. This optimistic outlook, combined with the company's success in leveraging AI for language education, seems to be resonating with investors. However, it's worth noting that there has been significant insider selling recently, which some market watchers may interpret as a potential red flag. Despite this, the stock's performance today suggests that the market is focusing more on Duolingo's growth potential and current valuation metrics.