Form 4: Duolingo Co-Founder Sells Shares, Exercises Options

Duolingo Co-Founder and CTO Severin Hacker executed a series of transactions, including exercising stock options, vesting performance-based restricted stock units, converting Class B to Class A shares, and selling Class A shares under a Rule 10b5-1 plan.

Summary

• Severin Hacker, Duolingo's Co-Founder, Chief Technology Officer, and a 10% owner, reported multiple transactions on October 20, 2025.
• Exercised stock options to acquire 10,000 shares of Class B Common Stock at an exercise price of $38.08.
• Vested 60,000 Performance-Based Restricted Stock Units (PSUs), resulting in the acquisition of 60,000 shares of Class B Common Stock.
• Converted a total of 80,000 shares of Class B Common Stock into Class A Common Stock (10,000 + 10,000 + 60,000).
• Sold a total of 9,900 shares of Class A Common Stock at weighted average prices ranging from $305.86 to $324.1. These sales were executed under a Rule 10b5-1 trading plan adopted on September 11, 2024.
• Disposed of 31,770 shares of Class B Common Stock for tax withholding purposes at a price of $312.73.
• Following these transactions, Hacker directly owns 72 shares of Class A Common Stock and 114,305 shares of Class B Common Stock.
• An additional 2,886,917 shares of Class A Common Stock are indirectly beneficially owned through the SBH Trust dated March 10, 2020.

Sentiment

Score: 5

Explanation: The sentiment is neutral. While there are significant insider sales, they were pre-planned under a Rule 10b5-1 plan, which mitigates the negative signal often associated with insider selling. The executive also exercised options and vested PSUs, indicating personal financial gains from company performance.

Positives

• Exercised 10,000 stock options at a significantly lower price ($38.08) compared to current market prices, indicating a substantial in-the-money value.
• Vested 60,000 Performance-Based Restricted Stock Units (PSUs), demonstrating the achievement of service-based and performance-based conditions for compensation.
• The sales of Class A Common Stock were conducted under a pre-arranged Rule 10b5-1 trading plan, which suggests a systematic approach to liquidity rather than an immediate reaction to market conditions.

Negatives

• Severin Hacker sold a total of 9,900 shares of Class A Common Stock, representing a reduction in direct holdings of the company's publicly traded shares.
• A significant number of Class B Common Stock (31,770 shares) were disposed of for tax withholding purposes, indicating a reduction in overall beneficial ownership due to tax obligations.

Future Outlook

The filing does not contain any forward-looking statements or guidance regarding the company's future performance or strategic direction. It solely reports insider transactions.

Industry Context

This Form 4 filing details routine insider transactions for a technology company executive. Such filings are common for executives managing their equity compensation and personal finances, often utilizing Rule 10b5-1 plans to mitigate accusations of trading on material non-public information. The transactions reflect personal financial planning rather than a direct commentary on Duolingo's industry position or competitive landscape.

Stakeholder Impact

• Shareholders may interpret the insider sales as a potential signal, although the pre-arranged nature of the 10b5-1 plan typically lessens concerns about immediate negative implications.
• Employees, particularly those with equity compensation, may view the vesting of PSUs and exercise of options as a positive indicator of the value of their own equity holdings.

Key Dates

Recommendation

The filing reports routine insider transactions, including both acquisitions (via option exercise and PSU vesting) and sales (under a 10b5-1 plan and for tax withholding). While insider sales can sometimes be a negative signal, the pre-planned nature of these sales under a Rule 10b5-1 plan adopted well in advance (September 2024) suggests a systematic approach to liquidity rather than a reaction to new, adverse information. This filing alone does not provide sufficient information to alter a fundamental investment thesis, thus a 'hold' recommendation is appropriate, pending further company-specific or market-wide developments.

Keywords

Duolingo, DUOL, Severin Hacker, Insider Trading, Stock Options, PSU, Rule 10b5-1, Share Sale, Class A Common Stock, Class B Common Stock