On Friday, Reddit shares gained 13% after signing a partnership agreement with artificial intelligence firm OpenAI, which is anticipated to increase advertising income on its social media platform.
Highlights:
| Aspect | Description |
|---|---|
| Stock Performance | Reddit shares gained 13% on Friday, reaching $63.64, close to its record closing price of $65.11. This rally added $1.2 billion in market capitalization. |
| Partnership Announcement | OpenAI faces increased lawsuits alleging unauthorized use of content to train large language models. |
| Advertising Partnership | OpenAI will become Reddit’s advertising partner, potentially increasing advertising income on Reddit’s platform. |
| Revenue Projections | Piper Sandler analyst estimates Reddit could see $50 million to $60 million annually from the deal. |
| Analyst Ratings | Over half of analysts covering Reddit stock have given it a “buy” rating, with a median price target of $63. |
| IPO Performance | Since their initial offering on March 10, priced at $34 each, Reddit shares have appreciated by nearly 90%. |
| Data Licensing Agreements | Reddit has data licensing agreements with unnamed firms, estimated to bring in at least $66.4 million in revenue this year. |
| New Monetization Channels | Reddit and YouTube are exploring new monetization channels beyond advertising, such as offering creator tools or licensing data to third parties. |
| Lawsuits Against OpenAI | OpenAI faces increased lawsuits alleging unauthorized use of content for training large language models. |
| Content Licensing Deals | OpenAI has secured content licensing deals with publishers like Associated Press and Financial Times. |
This rally propelled the stock to $63.64, close to reaching its record closing price of $65.11 set back in late March and putting the company on track for adding $1.2 billion in market capitalization.
Reddit announced a partnership with OpenAI on Thursday to leverage their technology for tools and features development and their ChatGPT platform to integrate Reddit’s content in a real-time structured format. OpenAI will also become Reddit’s advertising partner.
According to Piper Sandler analyst Thomas Champion’s estimations in a note issued Friday, Reddit could see between $50 million to $60 million annually from this deal.
Over half of analysts covering the stock have given it an investment rating of “buy,” with a median price target of $63.
Reddit fulfilled their “IPO promise of seizing AI opportunities to increase value,” according to Russ Mould, Investment Director for AJ Bell.
Since their initial offering on March 10, which priced them at $34 each, shares of this company have appreciated by nearly 90%.
In its February filing, YouTube intended to explore new monetization channels beyond advertising revenue, such as offering creator tools or licensing its data to third parties.
Reddit already has data licensing agreements with unnamed firms estimated to bring in at least $66.4 million this year in revenue. These permits enable third parties to access, search, and analyze the platform data.
This deal comes amid increased lawsuits filed against OpenAI by firms alleging unauthorized use of their content for training large language models.
OpenAI has recently secured several content licensing deals with publishers such as Associated Press and Financial Times.
