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Title: Duolingo's Stock Down 38%, Plummets After OpenAI's GPT-5 Language App-
Building Demo

Link: https://yro.slashdot.org/story/25/08/17/19421...

Duolingo's stock peaked at $529.05 on May 16th. Three months later, it's down
38% - with that drop starting shortly after backlash to the CEO's promise to
make it an "AI-first" company. Yet "The backlash against Duolingo going 'AI-
first' didn't even matter," TechCrunch wrote August 7th, noting Duolingo's
stock price surged almost 30% overnight. That surge vanished within two days -
 and instead of a 30% surge, Duolingo now shows a 5% drop over the last eight
days. Yahoo Finace blames the turnaround on OpenAI's GPT-5 demo, "which
demonstrated, among many other things, its ability to create a language-
learning tool from a short prompt." OpenAI researcher Yann Dubois asked the
model to create an app to help his partner learn French. And in a few minutes
GPT-5 churned out several iterations, with flashcards, a progress tracker,
and even a simple snake-style game with a French twist, a mouse and cheese
variation to learn new vocab.... [Duolingo's] corporate lawyers, of course,
did warn against this in its annual 10-K, albeit in boilerplate language.
Tucked into the risk factors section, Duolingo notes, "It is possible that a
new product could gain rapid scale at the expense of existing brands through
harnessing a new technology (such as generative AI)." Consider this another
warning to anyone making software. [The article adds later that "Rapid
development and fierce competition can leave firms suddenly behind -
perceived as under threat, inferior, or obsolete - from every iteration of
OpenAI's models and from the moves of other influential AI players..."]
There's also irony in the wild swings. Part of Duolingo's successful quarter
stemmed from the business's efficient use of AI. Gross margins, the company
said, outperformed management expectations due to lower AI costs. And AI
conversational features have become part of the company's learning tools,
helping achieve double-digit subscriber growth... But the enthusiasm for AI,
which led to the initial stock bump this week, also led to the clawback. AI
giveth and taketh away. In a new interview today with the New York Times,
Duolingo's CEO emphasized his hope that AI would only reduce its use of
contractors. "We've never laid off any full-time employees. We don't plan
to...." But: In the next five years, people's jobs will probably change.
We're seeing it with many of our engineers. They may not be doing some rote
tasks anymore. What will probably happen is that one person will be able to
accomplish more, rather than having fewer people. NYT: How are you managing
that transition for employees? Every Friday morning, we have this thing: It's
a bad acronym, f-r-A-I-days. I don't know how to pronounce it. Those
mornings, we let each team experiment on how to get more efficient to use
A.I. Yesterday there was also a new announcement from attorneys at Pomerantz
LLP, which calls itself "the oldest law firm in the world dedicated to
representing the rights of defrauded investors." The firm announced it was
investigating "whether Duolingo and certain of its officers and/or directors
have engaged in securities fraud or other unlawful business practices."

Read more of this story at Slashdot.

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