Reddit Stock Pops on Launch of New AI Ad Tools

• Reddit Inc. (RDDT) shares rose 6.60% to $134.53, hitting an intraday high of $146.16, after unveiling Reddit Community Intelligence, an AI ad tool that uses user posts and comments to enhance marketing campaigns, announced at the Cannes Lions festival.
• A Semrush analysis, noting Reddit as the second-most-cited website in Google’s (GOOG) AI overviews due to a $60 million AI training deal, contributed to a 6.8% stock gain on Monday, boosting investor confidence.
• Despite a nearly 18% year-to-date decline and concerns over Google’s search algorithm changes impacting 40% to 50% of Reddit’s traffic, the new AI tools signal Reddit’s push to strengthen its advertising revenue potential.

Reddit Inc. (RDDT) shares surged 6.60% to $134.53 in late morning trading on Tuesday, reaching an intraday high of $146.16, driven by the launch of innovative AI-powered advertising tools at the Cannes Lions festival on Monday. The new tool, Reddit Community Intelligence, enables marketers to tap into Reddit posts to identify emerging trends for ad campaigns and incorporate user comments directly into advertisements, enhancing engagement with the platform’s highly active communities. This development comes on the heels of a 6.8% stock increase on Monday, fueled by a Semrush analysis highlighting Reddit as the second-most-cited website in Google’s (GOOG) AI overviews, underscoring its growing relevance in AI-driven content discovery.

The Semrush report attributes Reddit’s strong performance on Google to a $60 million agreement that allows Google to use Reddit’s user-generated content to train its AI models, amplifying the platform’s visibility in search results. However, Reddit’s stock has faced challenges in 2025, with shares down nearly 18% year-to-date and well below their February peak of over $230. Investor concerns persist due to Reddit’s heavy reliance on Google for 40% to 50% of its traffic, as noted by JPMorgan (JPM), with recent changes to Google’s search algorithm raising questions about potential impacts on user traffic and platform growth.

Reddit’s strategic focus on AI-driven advertising tools reflects broader industry trends, where platforms are leveraging advanced technologies to offer advertisers more precise and engaging ways to connect with audiences. The Cannes Lions festival, a premier global event for the advertising industry, provided Reddit with a high-profile stage to showcase Reddit Community Intelligence, positioning the company to capture a larger share of digital ad budgets. Despite its year-to-date struggles, Reddit’s recent stock gains suggest renewed investor optimism about its ability to monetize its unique community-driven content and strengthen its competitive position in the social media and advertising landscape. The company’s ability to navigate search algorithm volatility and capitalize on its AI partnerships will be critical to sustaining this momentum.

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