Reddit (RDDT) has a long advertiser growth runway supported by a strong pipeline of initiatives into 2026, but slower progress on US logged-in user onboarding clouds the long-term monetization debate, Morgan Stanley said in a note Friday.

The firm raised its 2026 and 2027 revenue estimates by 1% each as advertiser breadth and spend depth continue to improve, the note added.

Morgan Stanley said active advertisers rose 75% year over year in Q4 for a second straight quarter and it expects further gains as Reddit Max scales and automation expands.

US logged-in user growth came in about 300,000 below it's estimate and fell 100,000 sequentially as Reddit tests a new onboarding flow, Morgan Stanley said.

The firm said early tests have helped retention, but rollout is taking longer than expected and feed improvements are likely to drive only gradual user growth recovery, with progress more likely in H2 2026.

Morgan Stanley maintained an overweight rating for Reddit and cut its price target to $240 from $265.

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