Here's Why Duolingo Stock Popped Today
Shares of language-learning app Duolingo (NASDAQ: DUOL) popped on Thursday after the stock was added to the S&P MidCap 400 index. As of 10 a.m. ET, Duolingo stock was up 6% but it had been up as much as 12% in earlier trading.
Investors should concern themselves with news regarding Duolingo's business. By contrast, this news has more to do with the stock. Duolingo stock will officially be a member of the S&P MidCap 400 index on Monday. Between now and then, index funds that track this index must buy shares of Duolingo so that the funds accurately reflect the index. This creates buying pressure and partly explains why Duolingo stock is up today.
I wouldn't suggest investors read too much into this news since it's not material to Duolingo's business. The company's ability to attract users, grow revenue, and turn a profit is the same regardless of what index it's a member of.
Source Fool.com
