HAPPY TUESDAY TO THE STREET
29 states opened their case against Meta (META) over child safety, with damages floated as high as $1.4T, roughly the company's entire market cap.
The states' own lawyers call $200B more realistic. But the bigger consequences could go beyond a bill. Legal experts say if the firm is found liable, Meta may be ordered to delete its owned data, and kill its signature infinite scroll feature.
The stock would likely weather a monstrous fine. But a killing blow to its business model? Holders might want to follow this one closely…
🟥 | US stocks slid for a third straight day, as global bonds rose in sympathy with US yields, weighing on equities.
📈 | One Notable Gainer: Amylyx Pharmaceuticals (AMLX) surged more than 60% after its first-in-class GLP-1 receptor antagonist hit every endpoint in a Phase 3 trial.
— Brooks & The Street Sheet Team
MARKET SNAPSHOT
S&P 500 Heatmap. Credit: Unusual Whales
Market Movers
BAIDU, HOME DEPOT, KLARNA
📉 | Baidu (BIDU) missed on both Q2 earnings and revenue.
📈 | Home Depot (HD) beat on the top and bottom lines and reaffirmed full-year guidance.
📉 | Klarna (KLAR) tumbled on weak Q3 and full-year guidance.
📉 | Fabrinet (FN) sank on a warning of a temporary margin headwind in fiscal Q1 2027.
Tomorrow's Trade Idea, Today
DUOL IT AGAIN
Stock Spotlight
Stock: Duolingo (DUOL)
Firm: DA Davidson
Current Price: $140
Price Target: $160
Implied Upside: 14%
Looking for more upside? Street Sheet Research members get 3 stock picks from the Top 30% of analysts with 30%+ implied upside each week. Subscribe today.
Owl of Approval
Wall Street spent two years ignoring Duolingo, as its app icon and stock price disintegrated.
But the opportunity (or maybe just Duo’s signature guilt tactics) won back DA Davidson.
Streaks Ahead
Analyst Wyatt Swanson upgraded the stock to Buy, arguing the market has missed the product work, marketing overhaul, and monetization tuning happening under the hood. He sees a long runway from here.
Daily active users inflected in June, for which Swanson credits the app’s streak revival event. But the one-time catalyst didn’t just lead to one-time gains. July and August both held up on a higher base.
Cohorts that used to churn are sticking around, which the analyst reads as proof the product itself improved. Retention, he says, gives the company more to sell against.
Lost in Translation
The Street is not fluent yet. 19 of 25 analysts still rate it a Hold, and shares are in the red year to date after a monster 2023-2024 run.
But Swanson is betting the crowd will start speaking his language soon enough. Duolingo has always been patient with slow learners.
Do you own any shares of Duolingo (DUOL)?
OVERHEARD ON THE STREET
🌍 US 30-year Treasury yields hit their highest level since 2002 after the US-Iran negotiating window closed without a deal, dragging German, French, Japanese and UK yields to multi-decade highs as well.
🇨🇦 President Trump and Mark Carney are negotiating hours before 50% tariffs on $20B of Canadian goods take effect under a rarely invoked 1930 statute.
🏛️ Senator Bernie Sanders (I-VT) proposed a bill to stop Social Security garnishment for defaulted student loans.
🏠 A new federal housing law cuts up to $10K from the cost of a manufactured home by dropping the permanent steel frame requirement.
⚖️ ABC and Disney (DIS) sued the FCC on First Amendment grounds over the agency's early review of eight broadcast licenses.
MONDAY'S POLL RESULTS
Do you own any shares of SoFi Technologies (SOFI)?
▇▇▇▇▇▇ 🐂 Yup, I'm holding
▇▇▇▇▇▇ 🐻 Nope, not interested
▇▇▇▇▇▇ 👀 No, but I'm interested
And, in response, you said:
🐂 Yup, I'm holding — “Younger market appeal adding members every day.”
🐻 Nope, not interested — “There are a lot of lenders in this same space. Aiming at high earning prime credit millennials sounds like a challenging market plan. I doubt either one of them is interested.”
