Reddit has partnered with OpenAI to bring its content to the popular chatbot ChatGPT, the companies announced Thursday, sending the social media platform’s stock up 12% in after-hours trading.
The deal underscores Reddit’s efforts to diversify beyond its advertising business and follows a recent partnership with Alphabet that allows the company’s content to be used to train Google’s AI models.
ChatGPT and other OpenAI products will use Reddit’s application programming interface, the company’s content distribution vehicle, after the new partnership.
OpenAI will also be Reddit’s advertising partner, the company said.
Ahead of Reddit’s March IPO, Reuters reported that Reddit had signed a deal with Alphabet worth about $60 million a year.
Investors see selling data to train AI models as an important source of revenue beyond Reddit’s advertising business.
Earlier this month, the social media company reported strong revenue growth and improved profitability for the first time since its market debut, showing that its deal with Google and efforts to grow its advertising business are paying off. It shows.
Reddit stock rose 10.5% to $62.31 after the bell. As of Wednesday’s close, the stock is up nearly 12% since its market debut in March.
