Reddit Inc (RDDT) Stock: Why Investors Are Buying the Dip After Recent Selloff

TLDR

Table of Contents

Reddit stock jumped 6.9% to close at $126.24 as broader markets rebounded on easing Middle East tensions
The company launched two new AI-powered advertising features at Cannes Lions 2025
Reddit Insights provides real-time campaign planning insights using AI-driven social listening
Conversation Summary Add-ons lets brands show positive user comments beneath their ads
Reddit stock remains down 23.9% year-to-date and trades 44% below its 52-week high

Reddit shares surged 6.9% on Monday, closing at $126.24 after a volatile trading session. The stock gained momentum alongside broader market recovery as geopolitical tensions showed signs of easing.

The rally came as major indices rebounded with the Nasdaq up 1.5% and S&P 500 gaining 1.0%. Reports of potential diplomatic progress between Israel and Iran helped fuel the market optimism.

Senior Iranian officials reportedly signaled willingness to restart nuclear talks. The condition was that Washington would not join Israel’s ongoing strikes, according to Wall Street Journal reports.

This diplomatic development triggered a decline in oil prices. Lower energy costs helped ease inflation concerns that have been weighing on markets recently.

Some investors may have also been buying the dip. Reddit and other growth stocks faced selling pressure at the end of the previous week.

The stock’s volatile nature continues to be on display. Reddit has experienced 61 moves greater than 5% over the past year, making it one of the more unpredictable plays in the social media space.

AI-Powered Advertising Push

Reddit’s latest product announcement coincided with the stock’s rise. The company unveiled two new AI-powered advertising features at Cannes Lions 2025 on June 16.

Reuters reported that Reddit $RDDT launched two new AI-powered advertising features aimed at helping brands drive greater engagement by tapping user conversations on the platform
The company said its AI-driven tool, "Reddit Insights powered by Community Intelligence", would… pic.twitter.com/9Nvizc1zxg
— Ray Wang (@rwang07) June 16, 2025

The first feature, Reddit Insights, uses AI-driven social listening technology. It provides marketers with real-time insights for campaign planning by identifying platform trends and testing campaign ideas.

The second offering, Conversation Summary Add-ons, allows brands to integrate positive user comments directly beneath their advertisements. This feature aims to show what users think about the advertised products or services.

Both features are powered by Reddit Community Intelligence, the company’s first AI-driven social listening tool. These capabilities are designed to help brands tap into user conversations more effectively.

Executive Commentary and Market Position

Chief Operating Officer Jen Wong expressed enthusiasm about the new products. “These new products are features I’ve wanted to build since my first day at Reddit,” Wong stated.
She emphasized the growing value of human content on the platform. “In a world increasingly flattened by AI, the value of human content on our platform only grows,” Wong added.
The executive highlighted how the tools offer more than just surface-level insights. “We’re offering deep context, perspective, and the voice of real people at scale,” Wong explained.

Reddit continues to position itself as a platform that leverages AI to improve search functionality. The company also focuses on using AI to boost user engagement across its communities.

Despite Monday’s gains, Reddit stock faces headwinds. The shares remain down 23.9% since the beginning of the year.

The stock is currently trading 44% below its 52-week high of $225.23 reached in February 2025. Early investors have still seen substantial returns, with IPO buyers from March 2024 sitting on gains of approximately 150%.

Wells Fargo downgraded Reddit from Buy to Hold 28 days ago. The firm raised concerns about Google’s AI integration affecting search-driven traffic to Reddit’s platform.

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