Reddit shares jump after-hours on OpenAI data-sharing deal

Reddit stock rose 11% in after-hours trading after the social media firm struck a data-sharing deal with OpenAI, the creator of the artificial intelligence (AI) chatbot ChatGPT.

Reddit said on May 16 that it will provide OpenAI with access to its data application programming interface (API), which will provide real-time content from posts made on the platform. Reddit said this would “bring Reddit content to ChatGPT and new products.”

In exchange, OpenAI will give Reddit users and moderators a suite of new AI-powered features aimed at strengthening user engagement.

Reddit also named the AI firm as its latest advertising partner.

Reddit fell 5.45% on May 16, but the partnely 11.05% to $62.61 in after-hours trading, according to Google Finance.

Reddit’s 24-hour share price. Source: Google Finance

Reddit signed a similar agreement with Google in February, reportedly worth $60 million.

Reddit has long been focused on finding ways to strengthen community engagement and develop revenue streams outside of offering advertising space.

The deal comes amid OpenAI and other AI firms facing mounting legal action over their data-gathering methods to train their models, with lawsuits alleging the firms illegally stole copyrighted content and private information.

On May 16, the world’s largest music publisher, Sony, sent letters to over 700 firms, including AI developers OpenAI, Microsoft and Google, saying it has “reason to believe” they may have made “unauthorized uses” of its music to train their models, according to multiple reports.

It previously had a blockchain-based rewards service, Community Points, but the firm shut it down last October, citing scalability concerns.

Reddit reported holding Bitcoin (BTC $66,146) and Ether (ETH $3,017) in its cash reserves in February and even allows users to pay for certain virtual items in Ether and Polygon’s (MATIC $0.7070).