Duolingo (NASDAQ:DUOL) shot up more than 40% Wednesday in its first session following an IPO that priced far above what the popular language-app firm expected. The strong IPO pricing and subsequent rally valued the company at nearly $5B.
DUOL opened at $141.40 shortly after noon ET and quickly rose to as high as $145 per, up 42% from the $102 a share that its initial public offering priced at.
The stock later pulled back some, but still closed at $139.01, gaining 36.3% for the session.
Duolingo runs popular free and paid apps that teach users 40 different languages. The company has about 40M monthly active users.
DUOL originally expected its initial public offering to price at $85-$95/share, but boosted that predicted range to $95-$100 earlier this week. However, the offering ultimately priced even higher than that.
All told, the company and some of its pre-IPO stockholders sold 5.1M Class A shares -- 3.7M from DUOL and another 1.4M from early investors. Additionally, Duolingo granted underwriters the option to buy as much as roughly 766,000 extra Class A shares for overallotments.
Class A shares carry one vote each, while Class B stock owned by insiders and pre-IPO investors have 20 votes each. That will give Class B stockholders 97.8% of the voting power following the IPO.
Duolingo wrote in an S-1 filing that it expects to have about 35.9M Class A and B shares in total following the offering, or 36.7M if underwriters exercise all overallotment options.
Assuming both share classes carry the same value, the IPO’s $102-a-share pricing and subsequent rally will value DUOL at about $4.8B to $4.9B, depending on how many overallotment shares underwriters buy.
Duolingo enjoyed pre-IPO backing from A-list investors Kleiner Perkins, CapitalG, Drive Capital, General Atlantic, NewView Capital and Union Square Ventures.