Why Is Reddit Stock Up by 14% Today?

On Friday, Reddit (RDDT) stock jumped 14% when news broke that the online forum community was making a deal with OpenAI.

The deal would take user-generated content from Reddit and use that to train the OpenAI language model, meaning that the AI program, when asked questions, would respond as though it were a person writing on Reddit boards.

The agreement also helps out Reddit, letting the moderators and the users operate it AI tools. The deal was signed on Friday and caused Reddit stock to soar. As trading opened on Monday, though, Reddit stock had dropped considerably. It did not fall as low as it was before the price jump, though.

When Reddit stock reached its peak on Friday, that was nearly as high as its all-time high of $75. The stock increased to $64.43 but is now down to $58.86.

OpenAI may be paying millions of dollars for the deal, but the details have not been released to the public. OpenAI needs vast amounts of content to not only shape its language learning program initially but to  keep the language updated to modern usages.

As language is rapidly evolving, faster than ever before thanks to online communication, it is difficult for AI programs to keep up. They need to be fed regular data dumps in order to sound authentic and up to date. Reddit provides a source of content language data for OpenAI to make use of.

Will Reddit Stock Recover?

Reddit’s stock took a nosedive not long after the news of the deal broke and the price surged. The question now is whether the OpenAI partnership will do anything for the stock other than the short-term gain that we already saw.

The partnership could help Reddit to become more relevant than ever, as it is not just shaping the way our language develops but also the way AI language evolves. Reddit’s owners will need to demonstrate that the OpenAI deal is good for the company and will help it grow in the future.

ABOUT THE AUTHOR See More

Timothy St. John

Financial Writer - European & US Desks

Timothy St John is a seasoned financial analyst and writer, catering to the dynamic landscapes of the US and European markets. Boasting over a decade of extensive freelance writing experience, he has made significant contributions to reputable platforms such as Yahoo!Finance, business.com: Expert Business Advice, Tips, and Resources - Business.com, and numerous others. Timothy's expertise lies in in-depth research and comprehensive coverage of stock and cryptocurrency movements, coupled with a keen understanding of the economic factors influencing currency dynamics. Timothy majored in English at East Tennessee State University, and you can find him on LinkedIn.

Related Articles

Why Is Amazon Stock No Longer Bullish?

1 day ago

Save

April Retail Sales Show Small Increase

1 day ago

Save

Has the Stock Market Recovered Too Quickly?

1 day ago

Save

Comments

Leave a Reply Cancel reply

You must be logged in to post a comment.