This is where long-term investing pays off.

The stock market has always had a problem with the known versus the unknown.

We know what’s happened in the past, and that can create a narrative that’s either positive or negative. And it’s easy to extrapolate the recent past to infinity.

But the future is inherently unknown.

In 2022, Netflix $NFLX ( ▼ 0.86% ) saw revenue fall sequentially in the fourth quarter, and the company’s growth was clearly decelerating. The slowdown was a shock following solid numbers during the pandemic, and shares lost 75% of their value in early 2022.

But late 2022/early 2023 was also an inflection point for the business.

Revenue growth picked up in the back half of 2023, and the company has posted solid revenue growth from then until today. No surprise, the stock also did well, gaining about 425% from the bottom to today.

Spotify $SPOT ( ▼ 2.25% ) went through a similar phase in 2022 and 2023. The stock sank because investors wondered if it could ever make money, and with growth slowing…why own the stock?

I made the case for Spotify in my first article on Asymmetric Investing on March 31, 2023, pointing out that recent cost cuts and likely price increases would drive higher margins. That thesis turned out to be correct, and after that operational inflection point, Spotify was a huge winner for investors.

Two earnings reports this week remind me of the inflections in Netflix and Spotify.

Duolingo $DUOL ( ▼ 4.95% ) and Zillow $Z ( ▼ 5.15% ) are making the right strategic moves to grow the business; they just haven’t seen the fruit from their investment yet. In hindsight, I think the inflection point will be obvious, and getting out in front of the market, realizing there’s an inflection, is where the money is made.

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A few weeks ago, I heard my 5-year-old daughter talking to someone downstairs. I went to see what was going on, and I saw her on the couch with her iPad.

She was talking to Duolingo ABC (the kids’ app).

Over the past six months, Duolingo has been on a journey to improve learning and improve engagement on the platform.

The focus has moved away from monetization and toward quality engagement, including more voice interactions. That’s what I saw!

There are a couple of ways I think we can measure the success of the strategy before we see a meaningful inflection in the financials.

First is the monthly active users (MAUs) and daily active users (DAUs). Management has said DAUs are what they measure and set a 100 million DAU goal in the “medium term”, but MAUs are the top of the funnel worth keeping an eye on.

The chart below shows the monthly (yellow) and daily (blue) active users on Duolingo, and depending on how you look at it, the figures look positive or negative.

I want to point out that in Q1 and early Q2 2025, Duolingo ran the “Dead Duo” campaign on social media that brought in a significant number of new users. BUT they don’t appear to have been high-quality users, quickly churning off the platform. You can see this in the 13.5 million added MAUs in Q1 2025, and then only 2.9 million were added throughout the rest of 2025.

Prior to 2025, Duolingo hadn’t had a sequentially down quarter for MAUs since 2021. So, Q1 2025 was an outlier, not the new norm.

In Q1 2026, there was no such viral campaign, but the company added 4.7 million MAUs and 3.8 million DAUs.

If this growth is sustainable and is an inflection point for the business, we will eventually see it in revenue, operating profits, and cash flow.

But the market doesn’t see that inflection yet, and management is only guiding for a 5.8% increase in bookings in Q2, so the stock is languishing. But I think an inflection in the growth rate (revenue and bookings) will hit in the next 12 months.

My thesis for Duolingo is that this can be a much larger learning platform, and for that to happen, the company needs to offer more solutions to more people at the same price. That’s how bundle economics become attractive for businesses and consumers.

Duolingo is one of the clearest examples of a company leveraging AI to build out the content that people want. Look at how it’s filled out gaps in language learning coverage below.

It’s done so by launching courses 11x faster than it did in 2024.

And management highlighted during the call how the modality of learning is changing. Instead of “tap to click,” there are more interactive spoken modalities. This is what I saw at home!

Strategically, Duolino is doing the right things, and if improved content leads to increased engagement and user numbers, this will indeed be an inflection point. Before the inflection really takes hold is when we want to buy the stock.

Shares are looking attractive too. The enterprise value to free cash flow is just 10x today, a crazy multiple if we get to ~25% growth that I think the company can achieve, and margins continue to expand.

The market can quibble with flaws — like weak bookings — for Duolingo here and there. But zoom out, and I see a company hitting an inflection point. I just hope the discount lasts long enough for me to buy more shares.

Duolingo isn’t the only company where I see an inflection.

At Zillow, we’re well past the inflection point for revenue; we just haven’t seen much of a response from the market.

That could be because we haven’t seen operating leverage in results yet, but we may be getting there. Look at the operating profit (green) below, and you can see that we’re going from negative to positive. Based on the guidance of mid-teens growth and adjusted EBITDA margin expansion, management thinks the momentum will continue.

And all of this is happening without a real improvement in the housing market.

Again, strategically, I think Zillow is doing all the right things, and a decade from now, it will be clear the company is the aggregator of demand in housing and a platform for real estate agents. But that inflection isn’t yet being seen, or valued, by the market.

These are just two of the Asymmetric Portfolio companies that reported this week. I’ll be covering the rest for premium subscribers over the next few days.