Reddit Stock Jumps after OpenAI Partnership

Reddit app is seen on a smartphone in this illustration taken, July 13, 2021. (Reuters)
Reddit app is seen on a smartphone in this illustration taken, July 13, 2021. (Reuters)
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Reddit Stock Jumps after OpenAI Partnership

Reddit app is seen on a smartphone in this illustration taken, July 13, 2021. (Reuters)
Reddit app is seen on a smartphone in this illustration taken, July 13, 2021. (Reuters)

Shares of Reddit rose nearly 15% on Friday, following a partnership with artificial intelligence firm OpenAI that is expected to boost advertising income for the social media platform.

The jump pushed the stock up at $64.80, within striking distance of the record closing price of $65.11 hit in late-March, and added $1.38 billion to the company's market value.

The partnership, announced on Thursday, allows Reddit to leverage OpenAI's technology to build tools and features, and OpenAI's ChatGPT platform to integrate Reddit's content in a "real-time, structured" manner. OpenAI will also become an advertising partner for Reddit.

The deal could yield more than $50 million to $60 million annually for Reddit, Piper Sandler lead analyst Thomas Champion said in a note on Friday.

More than half the analysts covering the stock have a "buy" or higher rating, with a median price of $63.

The deal delivers on Reddit's "IPO promise of seizing opportunities to make more of AI," said Russ Mould, investment director at AJ Bell.

The company's shares have gained more than 90% since their debut in March at $34 a piece.

In a February filing, the company indicated its intentions to explore new monetization channels beyond advertising revenue, including offering creator tools and licensing its data to third parties.

Reddit already has data licensing agreements with undisclosed firms that are projected to contribute at least $66.4 million in revenue this year. The license allows third parties to access, search, and analyze data on the platform.

The deal comes amidst a growing number of lawsuits against OpenAI, with firms alleging unauthorized use of their content for training large language models.

In recent months, OpenAI has also secured content licensing deals with several publishers, including the Associated Press and the Financial Times.



Apple Kills off Its Buy Now, Pay Later Service Barely a Year after Launch

An Apple logo adorns the facade of the downtown Brooklyn Apple store on March 14, 2020, in New York. (AP)
An Apple logo adorns the facade of the downtown Brooklyn Apple store on March 14, 2020, in New York. (AP)
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Apple Kills off Its Buy Now, Pay Later Service Barely a Year after Launch

An Apple logo adorns the facade of the downtown Brooklyn Apple store on March 14, 2020, in New York. (AP)
An Apple logo adorns the facade of the downtown Brooklyn Apple store on March 14, 2020, in New York. (AP)

Apple is discontinuing its buy now, pay later service known as Apple Pay Later barely a year after its initial launch in the US, and will rely on companies who already dominate the industry like Affirm and Klarna.

It's an acknowledgement from a company known for producing hit products that building a financial services business from scratch as Apple has been doing for several years is difficult and highly competitive.

Apple Pay Later launched with fanfare in March 2023 as a way for iPhone customers to split purchases of up to $1,000 into four equal payments with no fees or interest. The service was Apple's answer to the growing popularity of buy now, pay later services globally, and considered a sizeable threat to companies like Klarna, Affirm and others.

But Apple Pay Later was only available where Apple Pay was accepted whereas the other buy now, pay later companies had deeply integrated themselves into millions of merchant websites.

In an acknowledgement of how popular buy now, pay later services had become, Apple said at its developer's conference this month that it would start allowing banks to offer buy now, pay later plans to their customers through Apple Pay and Apple Wallet. Affirm would be integrated directly into Apple Wallet, and Apple customers would be able to open an Affirm account directly.

“With the introduction of this new global installment loan offering, we will no longer offer Apple Pay Later in the US,” Apple said late Monday. “Our focus continues to be on providing our users with access to easy, secure and private payment options with Apple Pay, and this solution will enable us to bring flexible payments to more users, in more places across the globe, in collaboration with Apple Pay enabled banks and lenders.”

Apple executives as recently as this month had indicated that the company still had plans for Apple Pay Later despite announcing plans to integrate Affirm directly into Apple Wallet.

Apple Pay Later was unique because Apple needed to create its own bank to offer the loans. The Apple Card is issued by Goldman Sachs, which means Goldman ultimately decides who gets approved and what spending limits are for each customer.

Apple has discontinued any new Apple Pay Later loans, but customers who have existing Apple Pay Later loans will be able to manage them inside Apple Pay.