Edtech giant Duolingo set an initial price range for the upcoming IPO today. The unicorn expects to hit $ 85 to $ 95 per share on its public debut and sell 3,700,000 as part of the deal.
As part of the transaction, a further 1,406,113 shares will be sold by existing shareholders and 765,916 shares will be offered to the syndicate banks. In total, the company could see 5,872,029 shares valued at around $ 557,842,755 on its IPO. Duolingo itself can raise up to $ 424,262,020 in gross proceeds in its current range, provided its syndicate banks exercise their option.
The IPO is a significant fundraising campaign for the company. Prior to going public, Duolingo’s largest single capital stroke was a Series D of $ 45 million in 2015.
Let’s take a look at what Duolingo, which we’ve covered in more detail here, is worth at IPO price, and let’s take a look at the preliminary results for the second quarter. Our goal will be to understand its valuation in the context of its growth. From there, we can draw some general conclusions about the larger edtech startup market.
What is it worth
After the IPO, Duolingo will have 35,892,152 shares outstanding without the option of the lead manager. At the bottom and top of its basic IPO valuation, Duolingo is worth $ 3.1 billion to $ 3.4 billion.
As with any IPO, Duolingo’s IPO rating increases when we include stocks that have been transferred in RSU or option form but do not yet need to be exercised. In the case of Duolingo, the number of shares rises to 43,776,271, according to an initial TechCrunch analysis of the company’s RSU and option details included in its S-1 filing. At that number of shares, Duolingo is worth $ 3.7 billion to $ 4.2 billion.
For any given number, the company’s underwriter option increases modestly.
All of the ratings listed above are a premium on the company’s final private price determined during its Series H funding round in November 2020. That $ 35 million round was valued by the company at around $ 2.4 billion.
On the face of it, the company’s IPO price range feels strong, whether we’re relying on simple or fully diluted stock numbers to get a new price for the company. But how do the new valuations compare to recent earnings? Let’s find out.