What Happened?
A number of stocks fell in the afternoon session after President Donald Trump threatened to impose a 'massive increase of tariffs' on Chinese imports, breaking a monthslong period of calm on Wall Street.
The unexpected comments sent major indices sharply lower, with the S&P 500 dropping 1.2% in what was on track to be its worst loss in over two months. The Dow Jones Industrial Average fell 372 points, while the tech-heavy Nasdaq composite slid 1.7%. Tariffs are taxes placed on imported goods, and an increase could lead to higher costs for American companies that rely on Chinese products. These costs are often passed on to consumers, which can dampen spending and corporate profits, creating uncertainty for investors and the broader economy.
The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks.
Among others, the following stocks were impacted:
- Consumer Subscription company Duolingo (NASDAQ: DUOL) fell 4%. Is now the time to buy Duolingo? Access our full analysis report here, it’s free for active Edge members.
- Online Travel company Expedia (NASDAQ: EXPE) fell 3.2%. Is now the time to buy Expedia? Access our full analysis report here, it’s free for active Edge members.
- Online Travel company Airbnb (NASDAQ: ABNB) fell 3.1%. Is now the time to buy Airbnb? Access our full analysis report here, it’s free for active Edge members.
Zooming In On Duolingo (DUOL)
Duolingo’s shares are extremely volatile and have had 39 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The previous big move we wrote about was 15 days ago when the stock gained 3.1% on the news that the company announced plans to increase its investment in China, one of its fastest-growing international markets.
The educational technology company planned to expand its local team and product offerings to tap into the country's rising demand for language learning. A company executive noted that China is home to one of the world's largest populations of English learners and test-takers, making it a very important market. Duolingo, which established its first international office in Beijing after entering the market in 2018, reaffirmed its commitment. The vice-president of business stated, "We want to keep investing, we want to keep hiring people and we want to keep developing our products so we can better serve our Chinese customers.".
Duolingo is up 1.2% since the beginning of the year, but at $329.82 per share, it is still trading 39% below its 52-week high of $540.68 from May 2025. Investors who bought $1,000 worth of Duolingo’s shares at the IPO in July 2021 would now be looking at an investment worth $2,373.
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