10:52 AM EDT, 10/31/2025 (MT Newswires) -- Reddit's ( RDDT ) advancements in automation, ad formats, and recommendation models are expected to drive durable growth, Morgan Stanley said in a Friday research report.

The company has a long runway for growth across active advertisers and higher penetration within current advertisers. Momentum across new ad formats is also expected to drive long-term growth, analysts wrote.

Morgan Stanley now expects a sequential increase of around 5 million users to 121 million in Q4, as the company works to improve user retention, according to the note.

The brokerage noted that Reddit's ( RDDT ) pipeline of ad initiatives will drive continued growth in 2026 and 2027. It also raised its revenue forecast for these two years by 3% and 4%, respectively.

Morgan Stanley said it reiterated its overweight rating on the stock and raised its price target to $250 per share from $230 earlier.

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