It’s not difficult to find out why Reddit shares have risen by almost 20 percent this week. Recently, at a major event in Cannes, Reddit introduced a term called “Reddit Community Intelligence. It is based on tools such as a new conversation summary and a Reddit insights feature. These tools can help them to generate income through advertisements on social media platforms. In spite of its strong online presence for years, Reddit was lagging in generating revenue from advertising but is making a strong comeback with its new Ai feature.
Advertisers can understand what users are talking about by studying millions of posts on Reddit with the aid of Ai tools.This feature helps them to understand how to create the ads that will fit in their Reddit community. In addition, the summary tool makes the ads more authentic by adding real user comments below, thus making the ads trustworthy and legitimate.
Some experts on Wall Street responded well. One of the experts, B. Riley, said that Reddit’s content is valuable, and he mentioned the deal where Meta spent a lot to partner with an AI company called Scale AI. This deal shows that online content is superficial for training AI.
But everything is not smooth yet. Because Reddit’s stock had dropped earlier this year, the investors are worried about the future of the company. We agree with B.Riley’s statement, but there is a drawback because of Google’s search engine update. According to this update, AI will answer questions of the user directly instead of showing them a website. This poses a significant risk for Reddit, because now people can visit Reddit without having accounts, by using Google links.
Reddit is expanding its use of AI to improve advertising, which is driving growth for the platform. However, there’s a risk that pushing too aggressively on ad monetization could alienate users. The recent stock increase has boosted investor confidence this week, but sustaining this momentum will require Reddit to carefully balance revenue generation with user satisfaction.
Shares of Reddit (RDDT 5.57%) were moving higher this week after the company launched two new AI-powered advertising tools and benefited from some positive analyst commentary on the stock. According to data from S&P Global Market Intelligence, the stock was up 19.4% for the week as of Wednesday’s close.