Reddit Launches AI-Powered Ad Tools; Shares Surge 15% Intraday

TradingKey - On Tuesday, Eastern Time, social media company Reddit (RDDT) saw its stock price surge by as much as 15% during trading, closing with an approximate gain of 6%, marking its highest price in nearly three months. This significant fluctuation stemmed from the company’s announcement that it would launch two artificial intelligence-based advertising tools.

One of the tools is called Reddit Insights, a real-time sentiment analysis tool. It leverages Reddit's Community Intelligence to transform user posts and comments into structured data, providing brands with real-time trend insights to aid in planning marketing activities. The globally renowned advertising group Publicis has validated the tool's practicality as an exclusive Alpha tester.

The other tool, Conversation Summary Add-ons, features a conversation summarization function that allows brands to showcase user-generated "positive" content beneath ads, thereby enhancing the integration of advertisements with community sentiment.

In its statement, Reddit emphasized that these two tools will reshape the community marketing paradigm, enabling brands to leverage Reddit's native ecosystem of 250 million monthly active users and reach high-intent consumer groups.

Currently, the global AI advertising market is experiencing robust growth. According to market research firm Allied Market Research, the global AI advertising market is projected to exceed $10.32 billion by 2031, with a compound annual growth rate of 39.7%. Analysts suggest that Reddit’s technological upgrade may provide it with a first-mover advantage in the process of making programmatic advertising more intelligent.

Despite a strong surge this week, Reddit's stock has still declined by 18% since 2025, driven by concerns over slowing growth in user engagement and search recommendations. According to Barron's last week, Reddit's daily active user growth rate dropped from 37% last year to 31% in the last quarter.

Additionally, The Verge reported on Wednesday that Reddit's Chief Product Officer, Pali Bhat, will resign in the coming months. This was confirmed by company spokesperson Tim Rathschmidt.