Reddit Stocks Soar 14% Following Strategic Partnership with OpenAI
Crypto News- Shares of Reddit Inc. (NYSE: RDDT), the social media behemoth, experienced a remarkable 14% surge following the announcement of its collaboration with OpenAI, the company behind the renowned ChatGPT.
On Thursday, Reddit disclosed a groundbreaking data-sharing agreement with OpenAI in a blog post, highlighting substantial benefits for both Reddit users and ChatGPT enthusiasts.
A Remarkable Turnaround
RDDT shares, which had been trending downward since the market opened on May 16, witnessed a swift recovery post-announcement. As reported by Google Finance, the stock price soared to $64.22 in after-hours trading, bouncing back significantly from the 5.5% decline at market close.
This marks the second significant uptick for Reddit’s stock in a short period. Earlier in the month, the company’s quarterly financial earnings report for Q1 2024 showcased record-breaking user traffic and increasing revenue, leading to a 13% rise in share prices. In March, anticipation of a potential NYSE listing propelled RDDT shares up by 48%.
Over the past month, Reddit’s shares have climbed approximately 35%, reflecting growing investor confidence and enthusiasm following its IPO in March.
OpenAI Partnership Spurs Optimism
The recent surge in RDDT shares can be attributed to Reddit’s announcement of OpenAI as its advertising partner. This partnership comes on the heels of Reddit reporting an ad revenue of $222.7 million, exceeding expectations from Bank of America analysts.
This revenue figure represents a 39% year-over-year increase. Overall, Reddit’s Q1 2024 revenue stood at $243 million, with the majority derived from advertising—a 48% increase compared to the same period last year.
The collaboration with OpenAI aims to bolster Reddit’s earnings further. As part of the agreement, Reddit will provide OpenAI access to its Data API, facilitating real-time access to Reddit’s content. This integration is set to enhance ChatGPT and other upcoming products.
Conversely, OpenAI will introduce a suite of new AI-powered features for Reddit users and moderators, aimed at boosting user engagement. Both companies will work together to deploy AI features on the platform, enabling AI models to better understand and interact with Reddit content.
A History of Strategic Partnerships
This isn’t Reddit’s first foray into partnerships leveraging its data for AI training. In February, Reddit collaborated with Google, granting the tech giant access to its Data API for more efficient AI model training.
Similar to the OpenAI deal, Google paid $60 million for access to Reddit’s training data, underscoring the value and potential of Reddit’s vast content ecosystem in the AI landscape.
FAQ: Reddit and OpenAI Partnership
Why did Reddit’s shares surge by 14%?
Reddit’s shares surged by 14% following the announcement of a data-sharing partnership with OpenAI, the company behind ChatGPT. This collaboration is expected to bring substantial benefits to both Reddit users and ChatGPT enthusiasts.
What is the nature of the collaboration between Reddit and OpenAI?
The collaboration involves a data-sharing agreement where Reddit will provide OpenAI access to its Data API. This will enable real-time access to Reddit content, enhancing ChatGPT and other AI products. OpenAI will also introduce new AI-powered features for Reddit users and moderators.
How did the announcement impact Reddit’s stock price?
Following the announcement, Reddit’s stock price recovered significantly from a downward trend, soaring to $64.22 in after-hours trading. This marked a substantial rebound from a 5.5% decline at market close.
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