Form 4: Duolingo CEO Converts PSUs, Manages Tax Liability

Duolingo's President & CEO, Luis von Ahn, reported the conversion of performance-based restricted stock units and a subsequent disposition of Class B common stock for tax purposes, effective December 1, 2025.

Summary

• Luis von Ahn, Duolingo's President & CEO, Co-Founder, and 10% owner, reported transactions involving derivative securities.
• On December 1, 2025, 120,000 Performance-Based Restricted Stock Units (PSUs) were converted into 120,000 shares of Class B Common Stock. These PSUs vest based on both service (25% annually as CEO) and performance (Class A stock price hurdles over 10 years).
• Concurrently, 120,000 shares of Class B Common Stock were converted into 120,000 shares of Class A Common Stock.
• Following these conversions, 51,768 shares of Class B Common Stock were disposed of at a price of $185.45 per share to cover tax liabilities.
• After all reported transactions, Luis von Ahn directly beneficially owns 3,286,635 shares of Class B Common Stock and 660,000 Performance-Based Restricted Stock Units.

Sentiment

Score: 7

Explanation: The filing indicates the vesting of performance-based equity, suggesting positive company performance metrics are being met. The subsequent sale for tax purposes is a neutral, routine event. The overall sentiment is moderately positive due to the underlying performance implied by the PSU vesting.

Positives

• The conversion of Performance-Based Restricted Stock Units (PSUs) indicates that performance conditions, likely related to stock price hurdles, are being met or are expected to be met, reflecting positively on company performance.
• The vesting of PSUs also signifies the satisfaction of service-based conditions, confirming Luis von Ahn's continued tenure as CEO.

Negatives

• The disposition of 51,768 shares of Class B Common Stock for tax liability purposes represents a reduction in direct beneficial ownership, although it is a common and expected practice for executives.

Future Outlook

The vesting conditions for the Performance-Based Restricted Stock Units (PSUs) include achieving certain Class A common stock price hurdles over a ten-year period, indicating a long-term performance outlook tied to the company's stock appreciation.

Industry Context

This Form 4 filing reflects routine insider transactions common for executives in publicly traded technology and education companies like Duolingo, involving the vesting and conversion of equity awards and subsequent tax-related dispositions. Such transactions are standard mechanisms for executive compensation and wealth management, often pre-planned under Rule 10b5-1.

Related Party Transactions

• Luis von Ahn, President & CEO, Co-Founder, and 10% owner of Duolingo, Inc., engaged in transactions involving the conversion of performance-based restricted stock units and Class B common stock, and the disposition of Class B common stock for tax liabilities. These are transactions between a key executive and the company, reported as required by SEC regulations.

Stakeholder Impact

• Shareholders: The conversion of PSUs and Class B to Class A common stock, followed by a tax-related disposition, provides transparency into executive compensation and ownership structure. The underlying performance conditions for PSUs suggest management's incentives are aligned with long-term stock appreciation.
• Employees: The continued vesting of executive equity awards may signal stability in leadership and confidence in the company's future.

Next Steps

• Continued service as CEO to satisfy service-based vesting conditions for remaining PSUs.
• Achievement of Class A common stock price hurdles over the next ten years for full vesting of performance-based PSUs.
• Potential future conversions of Class B Common Stock to Class A Common Stock at the reporting person's option or automatically under specified conditions.

Key Dates

Recommendation

This Form 4 filing details routine insider transactions related to executive compensation, specifically the vesting and conversion of performance-based restricted stock units and a subsequent sale to cover tax liabilities. While the vesting of performance-based awards is a positive indicator of the company meeting certain internal performance metrics, the overall transaction is standard and does not present new fundamental information that would warrant a change in investment thesis. Therefore, a 'hold' recommendation is appropriate, maintaining current positions while monitoring future company performance and market conditions.

Keywords

Duolingo, DUOL, Luis von Ahn, SEC Form 4, Insider Trading, Stock Units, Restricted Stock, CEO, Stock Conversion, Tax Liability, Beneficial Ownership, 10b5-1 Plan