Reddit's AI innovations and ad growth are driving stock higher, with revenue expectations and partnerships expanding

From Nasdaq: 2024-12-12 10:52:00

Reddit (RDDT) shares have surged 25.7% in the past month, outperforming the Computer & Technology sector and industry peers Snap (SNAP) and Meta Platforms (META). The rise can be attributed to Reddit’s focus on content and AI innovations to enhance user engagement and attract new users.

RDDT is introducing Reddit Answers, an AI-powered chatbot to improve user search experience and engagement. The feature offers AI-curated summaries of relevant conversations and discussions, aiming to streamline the search process and provide valuable information. Initially available to select U.S. users, plans include expansion to other languages and regions.

Reddit’s partnerships with Alphabet and Integral Ad Science strengthen its competitive edge. These collaborations enhance content discovery, community engagement, and advertiser confidence, benefiting both companies. The partnerships contribute to Reddit’s growth and drive engagement across its diverse user base.

The advertising business growth of 56% in the third quarter of 2024 propelled Reddit’s revenue to $315.1 million. Increased ad impressions, conversation placement ads, and enhanced ad products drove engagement and user base expansion. Reddit’s ad performance improvements and sector-specific successes contributed to its strong financial performance.

For the fourth quarter of 2024, RDDT expects revenue growth between $385 million and $400 million, driven by various factors. The Zacks Consensus Estimate for revenue stands at $404.97 million. Earnings estimates have increased by 21% in the past 30 days, reflecting positive growth expectations for Reddit.

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Read more at Nasdaq: Can Reddit’s AI Innovations and Ad Growth Push the Stock Higher?