Stock market today: Dow, S&P 500, Nasdaq hold steady with record highs still in reach

Reddit stock (RDDT) jumped 5% premarket Wednesday after gaining roughly 5% the previous day.

Shares of the social media platform have seen a massive upswing since early June. The stock is up 40% for the month through Tuesday’s trading session, and Wednesday’s rise would add to that climb.

Part of that upswing came as the company launched new AI tools at the Cannes Lions festival and after a recent analysis showed that Reddit is the second-most-cited website in Google (GOOG, GOOGL) AI overviews.

Despite Reddit stock’s climb this week, shares are still down nearly 14% for the year. The social media stock has suffered as changes to Google’s Search algorithm have spurred ongoing concerns among investors over its user traffic.

Citing an industry contact, RBC Capital Markets analyst Brad Erickson said that “spend on Reddit is expected to grow as brands recognize the importance of maintaining a presence on the platform,” especially as AI models impact advertisers by reducing Search traffic to websites.

Erickson, who maintained his Sector Perform rating on the stock, also noted that Reddit is cracking down on multiple users using the same account, which could be a “tailwind” for traffic.

Deutsche Bank analyst Benjamin Black said in a note to clients on June 18 that Reddit has “a viable strategy to reduce the current top-of-funnel user volatility,” as “there appears to be a renewed push to diversify user acquisition channels to platforms beyond Google.” Black reiterated his Buy rating on the stock.