Reddit’s user base has grown faster than expected, with a new Google partnership and advertising tools driving growth. Morgan Stanley analysts upgraded the stock to “overweight” from “equal-weight,” citing potential for outsized growth in 2025.
Morgan Stanley analysts have upgraded Reddit’s shares to a record high, citing the company’s growing user base and anticipated increases in advertising revenue. The upgrades follow a faster-than-expected growth in daily active users, driven by improved search features and a partnership with Google. This has increased time spent on the platform, making it more attractive to advertisers.
As a result, Reddit’s ad pricing is expected to move closer to competitors like Google and Meta. Analysts also anticipate the launch of several new ad-focused products with automated features over the next year. These include improved search capabilities and AI-powered tools for answering questions.
The announcement comes as part of Reddit’s efforts to expand its user base and improve its services. The company has been working to increase engagement and adoption through rapidly developed products, including a new search feature called “Reddit Answers.” This trial run of the tool will allow users in the US to access AI-powered answers to questions, with popular comments highlighted.
The upgrades have led to an increase in Reddit’s shares, with the stock rising over 3% to $168 in afternoon trading on Monday.
Source: https://www.investopedia.com/reddit-stock-hits-record-high-after-upgrade-from-morgan-stanley-on-its-growth-potential-8758317