Reddit stock jumps after company rolls out new AI advertising tools

Reddit shares popped about 7% after the social media company debuted new artificial intelligence-powered advertising tools.

The two new features, announced Monday in a post during the Cannes Lions festival, will help brands better leverage discussions on the platform. The company said the tools are powered by an engine called Reddit Community Intelligence, which turns "posts and comments into structured intelligence."

Reddit announced a "listening tool" called Reddit Insights, which shares real-time insights with marketers to help them identify trends and launch campaigns. The other tool, called Conversation Summary Add-ons, allows brands to show "positive" user content under their ads.

"These are tools for a new era of community marketing, one where brands can tap into Reddit's authenticity and connect meaningfully with high-intent communities around the world," the company wrote.

The company said Publicis served as the exclusive alpha tester for Reddit Insights, while Lucid and Jackbox Games were among the early testers for Conversation Summary Add-Ons.

Companies across industries are betting on new ways to harness AI to improve advertising campaigns and better engage with users. These new tools are transforming the industry while also putting pressure on some advertising stalwarts.

The industry is also currently navigating a bumpy environment spurred by the trade war with China.

During the recent earnings season, many companies warned of sluggish advertising sales in certain regions due to a rocky macroeconomic environment. Recent developments, however, have suggested a cooling of tensions between the U.S. and China.

Last month, Reddit posted strong sales and upbeat guidance. The company has benefited from recent changes to Google search and internal site improvements, which include convincing logged-out users to open accounts. Logged-in accounts are more beneficial to advertisers.

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