Reddit stock surges 11% on new AI partnership with OpenAI
Reddit has announced a strategic partnership with artificial intelligence firm OpenAI, leading to an 11% surge in the social network's shares during late trading. The collaboration aims to integrate Reddit's content into OpenAI's chatbot, ChatGPT, and other products while also enhancing Reddit's online communities with new AI features. The companies jointly stated that the agreement will enable OpenAI's AI tools to better understand and showcase Reddit content, particularly on recent topics.
OpenAI to become advertising partner for Reddit
In addition to content integration, the partnership will also see OpenAI becoming an advertising partner for Reddit. However, the specifics of this deal have not been disclosed yet. This move is part of Reddit's recent efforts to boost revenue through licensing agreements with AI developers and other companies. Just last week, Reddit introduced new policies governing data usage as part of this strategy.
Reddit's IPO and licensing deals boost revenue
Reddit's initial public offering (IPO) in March was one of the largest on a US exchange this year, raising approximately $748 million. Since then, the company has secured licensing deals worth $203 million in total, with terms ranging from two to three years. Notably, an agreement signed in January with Google worth $60 million aimed to train large language models, a crucial technology for generative AI.
OpenAI's active partnerships with media companies
OpenAI has been actively partnering with media companies to train its AI systems and display more real-time content within its chatbot. Earlier this month, it secured deals with Dotdash Meredith and The Financial Times in April. The partnership between Reddit and OpenAI was led by OpenAI Chief Operating Officer Brad Lightcap and approved by its independent directors.
