Reddit has partnered with Open AI to integrate its content into the popular chatbot ChatGPT, causing a 12% surge in Reddit’s shares during after-hours trading. This collaboration signifies Reddit’s strategy to expand beyond its advertising sector, following a recent partnership with Alphabet to provide its content for training Google’s AI models.
Through the partnership, ChatGPT and other OpenAI products will utilize Reddit’s application programming interface (API) to access its content. Additionally, OpenAI will serve as a Reddit advertising partner. Prior to Reddit’s IPO in March, it was reported that the deal with Alphabet was valued at approximately $60 million annually.
Investors see monetizing its data for AI model training as a lucrative revenue stream alongside Reddit’s advertising efforts. The company’s recent strong revenue growth and improved profitability, reflected in its first earnings report post-IPO, suggest that its collaborations with Google and focus on expanding its ads business are yielding positive results.
Following the announcement, Reddit’s shares jumped 10.5% to $62.31 in after-hours trading, marking a nearly 12% increase since its market debut.
