• Reddit stock surged 14% on Friday on news of a deal with OpenAI.

• The agreement will allow OpenAI to train its large language model using content on Reddit. 

• OpenAI will become an advertising partner on Reddit and offer its users and moderators AI tools.

Reddit stock surged 14% on Friday after it inked a content deal with OpenAI.

The stocks traded around $64.43 Friday morning, which puts it about 16% away from its post-IPO record high of nearly $75.

The deal will allow OpenAI to train its large language model using content from Reddit. As part of the agreement, Reddit users and moderators will gain access to AI tools, and OpenAI will become an advertising partner on Reddit.

Financial terms of the deal were not disclosed, but OpenAI has reportedly paid tens of millions of dollars for other content deals.

Content is crucial for the ongoing training and improvement of large language models, and OpenAI has inked similar licensing deals with other companies, including Google and Business Insider parent Axel Springer.

Prior to the deal, Reddit and OpenAI had a connection in that OpenAI CEO Sam Altman was a former board member of Reddit. Altman is also one of Reddit's biggest individual shareholders, owning a 7.6% stake in the company worth about $751 million as of Friday morning.

"Reddit has become one of the internet's largest open archives of authentic, relevant, and always up to date human conversations about anything and everything. Including it in ChatGPT upholds our belief in a connected internet, helps people find more of what they're looking for, and helps new audiences find community on Reddit," Reddit co-founder and CEO Steve Huffman said.

The AI content sharing deal comes just a few days after OpenAI announced its new large language model, GPT-4o, which is supposed to be faster and offers a virtual-assistant like experience.

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