Intelligence isn't measured by how much you know, but by how much you can learn. OpenAI executives definitely operate under this belief. For better or worse, ChatGPT will be scraping your shower thoughts and other Reddit comments to boost its intelligence.
Following a partnership with artificial intelligence firm OpenAI, which is expected to draw in more users to the social media platform through an AI-enhanced experience and attract more advertising revenue, Reddit stock rallied 11% in after-hours trading.
The stock was trading at $62 premarket, close to the highest closing price of $65.11 hit in late March.
OpenAI has reached a deal with Reddit that will allow it to explore the deepest corners of Reddit’s chat rooms and feed that content to ChatGPT. This marks another big deal for OpenAI in the competitive quest for high-quality original content. So, what’s the agreement?
This deal means that comments you make on subreddits such as r/showerthoughts and other whimsical message boards will be used to train ChatGPT’s AI capabilities. The financial details weren't disclosed, but it will enable Reddit to integrate new AI tools that enhance the user experience. Additionally, Reddit will add OpenAI as an advertising partner.
Reddit made a similar deal with Google earlier this year, allowing the internet giant’s AI models, such as Gemini, to access its content for training via the platform’s API. Investors responded positively to the latest licensing partnership, as it shows Reddit's efforts to diversify revenue beyond traditional advertising.
In a February filing, the company indicated its intent to explore new monetization channels, including offering creator tools and licensing its data to third parties. Reddit’s data licensing agreements with undisclosed parties are projected to generate at least $66.4 million in revenue this year.
With a daily active user count of over 80 million, Reddit is considered a smaller player in the social media market. The company went public on the NYSE on March 21. Its shares have gained 66% from their IPO price of $34 a piece.
Reddit released its first earnings report last week, revealing an impressive 48% revenue growth over the past year. Despite never having turned a profit in its 19-year history, investors are hopeful that the new partnership with OpenAI, along with similar deals, will finally lead the chat platform to profitability.
This article was written in cooperation with TradingView