Reddit shares surge on OpenAI ChatGPT deal, on pace for biggest gain since March

By James Rogers

Reddit and OpenAI have announced a partnership to bring the social media platform's content to ChatGPT

Shares of Reddit Inc. soared 15.3% Friday, lifted by the company's deal with OpenAI, putting the stock on pace for its biggest gain since March 25, 2024, when it rose 30% Dow Jones Market Data show.

That gain came just days after the social media platform's initial public offering on March 21. The stock, which is trading around $65, is also on pace for its highest close since March 26, when it closed at $65.11.

Reddit (RDDT) announced the partnership with OpenAI late Thursday, bringing the social media platform's content to OpenAI's ChatGPT and also giving OpenAI access to Reddit's Data API. "This will enable OpenAI's AI tools to better understand and showcase Reddit content, especially on recent topics," Reddit said in a blog post.

Related: Reddit shares climb on ChatGPT deal with OpenAI

As part of the partnership, Reddit will also bring new AI-powered features to Reddit's users and moderators. Additionally, OpenAI will become a Reddit advertising partner.

The deal was not completely out of the blue - Reddit counts OpenAI Chief Executive Sam Altman among its investors.

"WOAH, this could be big..." wrote Stocktwits, a social platform for investors and traders, on X, late Thursday. "Sentiment is neutral on Stocktwits but getting more bullish," the platform added.

Related: OpenAI launches new 'flagship' GPT-4o model, touting improved speed and performance

Reddit shares have risen 28.6% since the company's IPO.

Of 15 analysts surveyed by FactSet, eight have a buy rating, six have a hold rating and one has an underweight rating for Reddit.

-James Rogers

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05-17-24 1005ET

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