A bigger spotlight is shining on everybody's favorite cartoon owl mascot.
Duolingo Inc. (NASDAQ: DUOL) on Monday joined the S&P MidCap 400 Index. The Pittsburgh-based language learning app replaced Cable One Inc. in the index as Cable One replaces the recently acquired MDC Holdings Inc. in the S&P SmallCap 600.
The S&P Dow Jones Indices announced the pending shakeups last week. The S&P MidCap 400 provides investors with a benchmark: It is designed to measure the performance of 400 midsized companies, reflecting the distinctive risk and return characteristic of this market segment.
Duolingo has been publicly traded since late July 2021. Being part of an index usually means greater exposure to more investors, through vehicles such as ETFs, short for exchange-traded funds.
"The demand for a stock tends to increase when it is added to an index," said Kim Caughey Forrest, founder and chief investment officer at Bokeh Capital Partners LLC. "Funds that mirror the index will be buyers of the stock because it needs to be in the portfolio that represents the index. In the short term, this may drive the price of shares higher."
What that means In the longer run remains to be seen, she said.
"Certainly, the company should get more visibility from investors," Forrest said. "But the price moves depend on the strategy and execution of the company."
Duolingo shares have ranged from $116.82 to $245.87 over the past 52 weeks. It opened trading Monday at $201.74.
