11:28 AM EDT, 05/02/2025 (MT Newswires) -- Reddit's ( RDDT ) US daily active users are negatively impacted by Alphabet (GOOG, GOOGL) Google's ( GOOG ) new search formats, such as AI Overviews, AI Mode, and likely Gemini, which are diverting traffic away, Morgan Stanley said in a note Friday.

The company's advertising platform is improving as innovations in machine learning, measurement tools and ad formats are driving year-over-year increases in conversion and click volume, according to the note.

The firm said it is raising 2025 and 2026 earnings before interest, taxes, depreciation, and amortization estimates by about 27% and 30%, respectively, and increased its price target by only 10% to reflect a 25% discount due to weakening daily active users trends.

Morgan Stanley raised its price target on Reddit's ( RDDT ) stock to $154 from $140, and maintained an overweight rating.

Shares of Reddit ( RDDT ) were up 3.5% in recent trading Friday.

Price: 123.00, Change: +4.21, Percent Change: +3.54