Reddit shares surged about 16% in premarket trading on Friday after an upbeat quarterly revenue forecast highlighted growing returns from the company’s AI-powered advertising tools, News.Az reports, citing Reuters. 

The platform’s AI-optimized ad system helps advertisers place targeted ads within relevant discussion threads across its community-based forums, known as subreddits.

The strong outlook suggests Reddit’s advertising strategy is gaining traction as it competes more directly with larger rivals such as Meta Platforms, which operates Facebook and Instagram.

Reddit Chief Operating Officer Jen Wong told Reuters that the company is continuing to expand its workforce, saying Reddit is “still hiring and adding to our talent base.” The comments contrast with broader industry trends, where companies including Snap and Pinterest have reduced headcount in recent years while shifting focus toward artificial intelligence.

Reddit stock has experienced volatility over the past year, falling roughly 36% year-to-date. In comparison, Snap Inc. and Pinterest have each declined about 24% over the same period.

In the latest quarter, Reddit reported daily active unique visitors of 126.8 million, up 17%, while global average revenue per user rose 44%.

The company has expanded its AI-based advertising tools, including features such as an AI copywriting assistant tailored for Reddit ads and automated image cropping tools designed to optimize creative assets for different ad placements.

Beyond advertising, Reddit’s large content library has also become increasingly valuable for artificial intelligence firms seeking data to train large language models, which power systems such as ChatGPT.

The company currently trades at a 12-month forward price-to-earnings ratio of 30.40, compared with Snap at 9.93, Pinterest at 10.27, and Meta at 19.05.

News.Az 

By Nijat Babayev