Reddit (NYSE: RDDT) stock price surged around 9% on Tuesday, even as Wall Street started the day with a slump amid uncertainties around the Israel-Iran conflict.
At the time of the publication, Reddit stock was trading around $139.00, an 8.8% jump from its previous close.
Reddit showed big gains after the opening bell as it rose 15% to $145.48, but later shed gains and is currently trading below $140. This sharp upward move at the open shows that buyers are piling in with strong conviction.
For day traders, this kind of momentum can be a promising signal to act on, but it’s also a reminder to dig deeper into the company’s fundamentals and be aware of any underlying risks before making a trade.
What’s fueling Reddit stock’s recent jump?
A host of factors are working to drive Reddit’s recent rally as the social network reported strong financial results.
The investors also look optimistic about the trajectory of the stock, and the introduction of new AI-powered advertising tools is cheering up the overall mood around the stock.
The new artificial intelligence-powered tool boosted confidence that Reddit can keep expanding its business and attract more advertisers.
Reddit introduced a listening tool called Reddit Insights, which will share real-time insights with advertisers to help them craft advertising campaigns.
It also announced a Conversation Summary Add-ons tool, which will help brands to show positive user content under their ads.
In the first quarter, Reddit reported a whopping 61% jump in revenue at $392.4 million, which was way above Wall Street expectations.
The daily active users on the social media platform climbed 31% to 108.1 million, which not only marked Reddit’s return to profitability but also gave investors renewed confidence in the company’s growth trajectory.
CEO Steve Huffman emphasized the platform’s unique value as a hub for real opinions and authentic community interaction.
“20 years in, I have never been more excited about Reddit’s future than I am now. We’re growing and building a more valuable platform for community and human perspective,” he added.
Can Reddit stock sustain its gains?
The immediate future looks optimistic for Reddit as the investors are showcasing confidence, and most of the analysts are giving it a ‘Buy’ rating.
But, the social network platform still needs to figure out a way ahead of relying heavily on Google search traffic.
Google’s frequent algorithm changes can have major impacts on user flow.
Reddit had massively gained from Google’s recent changes to search and internal site, which convinced logged-out users to open an account.
Advertisers prefer logged-in accounts.
Reddit’s upcoming earnings report is going to be critical as investors will closely analyze if the company can keep up its impressive growth and prove that its high stock price is justified.
As per TIPRANKS, most of the analysts gave the stock a ‘Buy’ rating, and just one ‘Sell’ recommendation.
Wall Street slump amid looming uncertainty
US stocks opened lower on Tuesday as tensions between Israel and Iran intensified and investors awaited the Federal Reserve’s latest policy decision.
At the opening bell, the Dow Jones Industrial Average dropped 156 points, or 0.37%, to 42,358.62. The S&P 500 slipped 21 points, or 0.35%, to 6,012.15, while the Nasdaq Composite fell 74 points, or 0.38%, to 19,627.08.
The post Reddit stock surges 9%: What’s fueling social network’s latest rally appeared first on Invezz