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Reddit Inc. (RDDT) shares surged 5.23% to $124.36 on Monday as the social media platform unveiled two new AI-powered advertising features designed to help brands better engage with its user community.

The announcement comes as digital platforms increasingly turn to artificial intelligence to attract marketers in a highly competitive advertising landscape amid ongoing economic uncertainties. Reddit’s latest move positions the company to capitalize on the growing trend of AI-driven marketing tools while leveraging its unique community-based platform structure.

Reddit Launches New AI-Powered Advertising Tools
 

Reddit’s newly launched AI-driven tool, “Reddit Insights,” provides real-time insights to marketers for campaign planning by identifying trending topics on the platform and testing campaign concepts. The feature represents a significant step forward in the company’s efforts to monetize its vast repository of user-generated content and community discussions.

Additionally, the platform introduced “Conversation Summary Add-ons,” which allows brands to integrate positive user comments directly beneath advertisements to showcase authentic community sentiment about advertised products or services.

These tools arrive at a strategic time as platforms like Reddit, Snap (SNAP), and Pinterest (PINS) are increasingly relying on AI-driven ad targeting capabilities to differentiate themselves in the crowded digital advertising space.

The timing is particularly relevant given that WPP Media recently trimmed its global ad revenue growth forecast to 6% from 7.7% due to uncertainties surrounding changing U.S. trade policies. Brands are expected to prioritize flexible advertising contracts and accelerate adoption of AI tools for both ad production and user targeting, according to the media investment arm of advertising giant WPP.

RDDT Stock Gains on Launch of New AI-Driven Tools
 

Reddit shares closed at $124.36, marking a robust 5.23% gain ($6.18 increase) from the previous day’s close of $118.18, with trading volume reaching 2.5 million shares.

The stock has demonstrated remarkable momentum over the past year, delivering a 104.22% return compared to the S&P 500’s 11.29% gain during the same period. Despite some recent volatility, with the stock trading in a 52-week range of $49.13 to $230.41, Monday’s gains reflect investor confidence in Reddit’s AI strategy and advertising potential.

The company’s financial metrics reveal a growing but premium-valued business, with a market capitalization of $22.96 billion and a trailing P/E ratio of 24.94. Reddit’s revenue reached $1.45 billion over the trailing twelve months, with a profit margin of 8.07% and diluted earnings per share of $4.99. Analysts maintain an average price target of $146.97, suggesting potential upside from current levels, while the company’s strong cash position of $1.95 billion provides financial flexibility for continued investment in AI and advertising technology development.

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