Reddit (RDDT) Stock Surges After Partnership with OpenAI Announced
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Reddit (RDDT) Stock Surges After Partnership with OpenAI Announced

Reddit's OpenAI partnership deal, granting access to its content for AI training, sparked a surge in Reddit's stock price.
Neither the author, Tim Fries, nor this website, The Tokenist, provide financial advice. Please consult our website policy prior to making financial decisions.

Reddit (NYSE: RDDT), the popular social news aggregation and discussion platform, has announced partnerships with two major players in the artificial intelligence (AI) industry this year: Google (NASDAQ: GOOG) in February and, more recently, OpenAI.

These agreements aim to enhance Reddit’s platform with AI-powered features and diversify its income sources beyond traditional advertising. The massive social media site will, in turn, help OpenAI and Google train their artificial intelligence models using the site’s data.

OpenAI Inks Partnership with Reddit

In the latest development, Reddit has partnered with AI start-up OpenAI, granting the company access to Reddit’s vast content library for training its AI models.

Reddit will introduce AI-powered features on its platform, leveraging OpenAI’s cutting-edge technologies as part of the deal. The partnership follows OpenAI’s similar agreements with other publishers, such as the Associated Press and the Financial Times.

Reddit Made a Similar Deal with Google in February

Prior to the OpenAI deal, Reddit announced a partnership with Google in February, allowing the tech giant to access Reddit data to train its AI models. Both the OpenAI and Google partnerships have raised legal and copyright concerns as the EU and US examine whether using content to train AI tools constitutes copyright infringement or falls under fair use exceptions.

After the OpenAI partnership announcement, Reddit, Inc. (RDDT) stock has experienced significant movement in the premarket trading session today at the time of writing. The stock closed at $56.38 on Thursday, down 5.45% from the previous close. However, pre-market trading showed a promising increase to $64.00, up 13.52%.

Reddit’s market cap currently stands at $9.219 billion, with revenue (TTM) of $883.25 million. Despite a significant net loss of $605.02 million and a negative profit margin of -68.50%, the company holds total cash of $1.67 billion and a low total debt/equity ratio of 1.37%. Analyst price targets for Reddit stock range from a low of $45.00 to a high of $65.00.

Will other sites like Reddit continue the trend of inking deals with companies to provide data for training large language models? Let us know in the comments below.

Disclaimer: The author does not hold or have a position in any securities discussed in the article.