On Thursday, Reddit announced a strategic partnership with OpenAI, signaling a significant move to broaden the accessibility of its content through popular chatbot ChatGPT. This collaboration prompted a notable surge of 12% in Reddit’s shares during extended trading.
The partnership reflects Reddit’s strategic initiative to diversify its revenue streams beyond its traditional advertising model. This follows closely on the heels of Reddit’s recent collaboration with Alphabet, aimed at leveraging its content for training Google’s AI models.
Under the new agreement, ChatGPT and other products developed by OpenAI will utilize Reddit’s application programming interface (API) to access and distribute its vast repository of content.
Additionally, OpenAI will now join Reddit as an advertising partner, further solidifying the ties between the two entities.
This move underscores Reddit’s broader strategy to capitalize on its data assets by providing them for AI model training—a move seen as a significant revenue opportunity apart from its core advertising business.
The market response to Reddit’s recent financial performance has been positive, with strong revenue growth and improved profitability reported in its first earnings report post-initial public offering (IPO). This suggests that Reddit’s strategic partnerships, including the deal with Google and its efforts to bolster its advertising business, are yielding promising results.
Following the announcement, Reddit’s shares surged by 10.5% to reach $62.31 in after-hours trading, marking an overall increase of nearly 12% since its IPO debut in March.
