Reddit shares jumped more than 12% on Friday after a strong quarterly revenue outlook highlighted rising returns from the platform’s AI-powered advertising tools.
If the gains hold, Reddit is set to add about $3.4bn in market value.
The company’s AI-optimised ad platform allows advertisers to place targeted promotions directly within relevant discussion threads across its interest-based communities, known as subreddits.
The upbeat results suggest Reddit’s ad strategy is gaining traction as it competes with larger digital advertising rivals such as Meta Platforms’ Facebook and Instagram. Chief Operating Officer Jen Wong told Reuters that the company is still expanding its workforce and continuing to add talent.
That stands in contrast to rivals including Meta, Snap and Pinterest, which have cut thousands of jobs over the past year as they streamline operations and redirect spending toward artificial intelligence.
Reddit’s stock remains down about 36% year to date, while Snap and Pinterest have each fallen roughly 24%.
The company reported first-quarter revenue growth of 69% year on year. Daily active unique visitors increased 17% to 126.8 million, while global average revenue per user rose 44%.
Analysts at B. Riley Securities said growth in daily active users and engagement should benefit from efforts to improve feed personalisation, close the gap between iOS and Android app experiences, simplify onboarding and strengthen marketing.
Reddit’s advertising system uses AI to improve campaign creation and management, including tools such as an AI copywriter for Reddit-specific ads and an automatic creative asset cropper that optimises images for different ad placements.
