Reddit (NYSE:RDDT) saw its stock climb 5% Friday, recovering from recent declines after bullish analyst commentary highlighted the platform’s advertising revenue potential despite lingering user concerns.

Shares had fallen 14% over the last five days amid worries over declining daily active users (DAUs) and reduced citation share on ChatGPT. However, Citizens analyst Andrew Boone offered reassurance by reiterating his Market Outperform rating and $300.00 price target.

Boone pointed out that Reddit’s U.S. logged-in users monetize at “more than 10 times the rate of logged-out users,” suggesting significant upside as the platform’s advertising tools continue to mature. He compared Reddit’s monetization prospects to those of Meta (NASDAQ:META), noting there is “ample room to drive revenue outperformance.”

The analyst downplayed recent concerns around search engine optimization (SEO) as “simply noise,” emphasizing instead the momentum in Reddit’s advertising operations. With advertising market conditions remaining steady, Boone expects Reddit’s earnings to “materially outperform near term.”

The stock’s rebound comes as Reddit continues to enhance its advertising infrastructure following its market debut earlier this year.

Reddit stock price

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