Reddit (RDDT) is rolling out a new artificial intelligence feature, Reddit Answers, designed to help users quickly find answers based on content from its platform. The social media platform stated that this feature will initially be available to a small group of U.S. users as part of a limited rollout, with plans to expand it more broadly in the future.
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How Will Reddit Answers Work?
Reddit Answers will be accessible through a new button on the homepage and will function similarly to tools like ChatGPT. However, unlike ChatGPT, it will source responses exclusively from Reddit content. Users can ask questions on various topics and receive AI-generated summaries of tips, insights, and quotes from related Reddit posts.
Initially, Reddit Answers will be available in English for iOS and desktop users, with plans to extend support to Android and other languages. While the AI chatbot will handle queries on most topics, Not Safe for Work (NSFW) content will be excluded.
Reddit Answers Bridges Users to Original Posts
Unlike other generative AI tools, Reddit Answers aims to direct users to original posts rather than simply replacing them with summaries. As Reddit’s VP of Product, Serkan Piantino, explained to CNBC, “Reddit Answers is more about building a bridge to the content than it is about being a replacement for it.”
RDDT Is Steadily Expanding Its Reach
The social media platform is steadily growing its user base and targeting international markets, particularly countries like India and Brazil, to attract more users and explore new advertising revenue streams.
Morgan Stanley Analyst Upgrades RDDT
Meanwhile, five-star-rated Morgan Stanley analyst Brian Novak has upgraded RDDT to a Buy from Hold and raised the price target to $200 from $70. Explaining the rationale behind the upgrade, Novak highlights that Reddit’s platform is still in its early stages and anticipates strong engagement and advertising growth to drive user activity, time spent, and ad revenue. Additionally, the analyst forecasts “user and time spent per user [on the platform] growing, ad pricing rising (as advertisers pay for improving performance), and upside to ad load as well.” Ad load refers to the number of ad slots available for advertisers.
The analyst’s price target suggests an upside potential of 13.9% from current levels.
What Is the Target Price for RDDT Stock?
Analysts remain cautiously optimistic about RDDT stock, with a Moderate Buy consensus rating based on 10 Buys, five Holds, and one Sell. Over the past six months, RDDT has surged by more than 100%, and the average RDDT price target of $116.69 implies a downside potential of 33.2% from current levels.
