Reddit Stock Rockets On Strongest Quarter Yet, Thanks To AI-Powered Ad Boom — Retail Confidence Surges

• Reddit’s shares are heading for their best day in nearly three months.
• The company reported third-quarter revenue and issued a Q4 forecast that exceeded analysts’ expectations.
• Reddit’s AI-powered ad tools helped attract new advertisers across industries, boosting revenue growth.

Reddit, Inc.’s stock surged by over 10% in the after-hours session on Thursday, following the forum site’s upbeat quarterly results and forecast.

If the move holds on Friday, it would be the stock’s best performance since August. 

AI-Powered Ad Tools Driving Gains

Reddit’s management stated that the company’s artificial intelligence-powered (AI) advertising tools were attracting a broader range of advertisers, with the number of active advertisers increasing by 75% in the third quarter.

Revenue soared 68% to $584.9 million, primarily driven by higher ad sales, topping analyst estimates of $549.1 million. Profit grew to $162.7 million, or $0.80 a share, up from $29.9 million, or $0.16 a share, topping analysts’ target of $0.52 a share. The company posted its highest revenue and profit last quarter since going public in March 2024.

Ad demand increased across various industries, including retail, finance, and pharmaceuticals, CFO Drew Vollero said on the analyst call. Of the 15 industry verticals the company tracks, nine rose by 50% or more, he added.

Reddit guided fourth-quarter revenue to be between $655 million and $665 million, above analysts’ projection of $637.5 million.

But … User Growth Slows 

That said, Reddit’s user base growth slowed, particularly in its main market, the U.S., partly due to a decline in traffic from AI platforms in September. 

Daily active unique visitors (DAUq) in the U.S. grew only 7%, compared to 11% in the second quarter. Global DAUq rose 19%, compared to 21% in Q2. 

The company also did not share updates on its AI partnerships with Google and OpenAI, which are reportedly set to be renewed. 

"We have great relationships with Google and OpenAI," CEO Steve Huffman said in an interview on CNBC's Mad Money, adding that he believes Reddit can be an AI winner without the AI cost.

What Is Retail’s View?

On Stocktwits, the retail sentiment shifted to ‘extremely bullish’ as of late Thursday, up from ‘neutral’ the previous day. The ticker was trending at number 4 at the time this report was written.

“$RDDT this has been hard to hold lately but today paid off big,” said one user, referring to the recent slide in shares. RDDT stock had dropped over 28% since a record high on Sept. 18, including a 7.8% drop in Thursday’s regular session ahead of the company’s earnings report. 

As of the last close, the shares have gained 19% year to date.

For updates and corrections, email newsroom[at]stocktwits[dot]com.

Read Next: Amazon Narrows Cloud Gap With Microsoft, Google: Stock Soars Toward Best Day In Over 3 Years After Earnings Blowout

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