Legendary investor Peter Lynch said to 'invest in what you know,' and everyone knows Duolingo. But does the math back up the meme? Let's put the 'Fast Grower' to the test.
Great point, and you're right; Lynch famously avoided businesses with one major customer. And in a way, Apple/Google act like that here; they hold the distribution keys.
I think Lynch would view that 30% cut as a 'cost of doing business' (like a tariff), but he’d be watching that Gross Margin line like a hawk. If AI costs scale linearly with revenue, the operating leverage never materializes. Definitely the biggest bear case for the 'Fast Grower' thesis
Great point, and you're right; Lynch famously avoided businesses with one major customer. And in a way, Apple/Google act like that here; they hold the distribution keys.
I think Lynch would view that 30% cut as a 'cost of doing business' (like a tariff), but he’d be watching that Gross Margin line like a hawk. If AI costs scale linearly with revenue, the operating leverage never materializes. Definitely the biggest bear case for the 'Fast Grower' thesis