Reddit Shares Up 11% Post OpenAI Data Training Deal

Reddit partners with OpenAI for AI model training, boosting shares by 11% and expanding AI-driven features for users.

By Alex P. Chase

5/16, 17:38 EDT

Key Takeaway

  • Reddit partners with OpenAI, allowing AI model training with its data, boosting shares by 11% in extended trading.
  • The deal includes AI feature integration for Reddit users and advertising partnership, following a similar agreement with Google.
  • OpenAI's innovation continues with a new AI model and ChatGPT desktop version, aiming for video chat capabilities.

Reddit's Strategic Partnership with OpenAI

Reddit announced a significant partnership with OpenAI, the creators of ChatGPT, allowing the AI firm to utilize Reddit's vast content for training its models. This collaboration grants OpenAI access to Reddit's Data API, offering "real-time, structured, and unique content from Reddit," a move that is expected to enhance the capabilities of OpenAI's artificial intelligence models. In return, Reddit will integrate AI-driven features for its users and moderators, leveraging OpenAI's technology. Additionally, OpenAI will become an advertising partner on the Reddit platform. This partnership mirrors a similar agreement between Reddit and Google made in February, where Google was permitted to train its AI models using Reddit's content.

Reddit's CEO, Steve Huffman, emphasized the value of including Reddit's extensive archive of human conversations in ChatGPT, highlighting the potential to connect users with relevant content and communities. OpenAI's CEO, Sam Altman, a former Reddit board member and significant shareholder, along with COO Brad Lightcap, played key roles in finalizing the deal, which received approval from OpenAI's board.

OpenAI's Continuous Innovation

OpenAI recently unveiled a new AI model and a desktop version of ChatGPT, marking the company's latest advancements in expanding the chatbot's accessibility and functionality. The introduction of GPT-4o, as announced by OpenAI's Chief Technology Officer Mira Murati, promises a "much faster" model with enhanced text, video, and audio capabilities. OpenAI's long-term vision includes enabling video chats with ChatGPT, further pushing the boundaries of AI interaction.

Reddit's Market Momentum

The announcement of the partnership with OpenAI contributed to an 11% surge in Reddit's shares in extended trading on Thursday. This boost is part of a broader trend for Reddit, which has seen its stock rally earlier in the week alongside other meme stocks like GameStop. Since its public debut in March, Reddit has experienced significant market movements, reaching a record close shortly after its IPO and now trading near its all-time high of $65.11. This recent performance underscores the market's positive reception to Reddit's strategic initiatives and its potential for future growth.

Management Quotes

  • Steve Huffman, CEO of Reddit:

    "Reddit has become one of the internet’s largest open archives of authentic, relevant, and always up to date human conversations about anything and everything. Including it in ChatGPT upholds our belief in a connected internet, helps people find more or what they’re looking for, and helps new audiences find community on Reddit."

  • Mira Murati, Chief Technology Officer at OpenAI:

    "The new model, GPT-4o, is 'much faster,' with improved capabilities in text, video and audio."