Shares of Reddit (RDDT.US) climbed roughly 6% on Thursday, snapping a four-session losing streak. The move follows an upbeat note from Piper Sandler, which highlighted that the social media platform's average daily users expanded by 8% month-over-month in August, marking the strongest monthly gain so far this year.
According to Piper Sandler, the August rebound comes after a 2% dip in July, with growth in the Feed audience more than offsetting a decline in Conversation users. The firm's analysis of Reddit Ads Manager data shows total audience growth accelerated to 18% year-over-year in August, up from 12.8% in July.
Meanwhile, Meta Platforms (META.US) also edged higher on Thursday, following a roughly 6.5% surge the prior session that was largely driven by investor enthusiasm over its newly launched Muse AI agent. Other ad-dependent social media peers, including Snap (SNAP.US) and Pinterest (PINS.US), which had declined in recent sessions, also posted modest gains on Thursday.
Piper Sandler noted that international user growth accelerated to 29.3% in August, up from 19% in July, while U.S. user growth came in at 5.2%. The firm added that weekly user momentum has been robust since early July, driven primarily by international Feed activity.
However, the brokerage cautioned that an upcoming adjustment to Reddit's Ads Manager forecasting model is expected to lower its September audience estimates by roughly 20%. Piper described the one-time reset as a methodological shift rather than a reflection of deteriorating underlying user trends, emphasizing that these changes impact projections only, not auctions, optimization, or ad delivery.
Additionally, the firm's digital advertising data shows August ad spend came in 60 basis points above expectations, with the largest upside surprises coming from Netflix (NFLX.US), Roku (ROKU.US), YouTube (GOOGL.US), and Pinterest. Piper also raised its third-quarter spending growth estimate by 30 basis points, and similarly lifted its Q3 ad spend growth projection for Reddit by 30 basis points.