In the wake of announcing a collaborative data-sharing agreement with OpenAI, the developer behind the renowned AI chatbot ChatGPT, Reddit's stock surged by 11% during after-hours trading.

The arrangement, unveiled by Reddit on May 16, facilitates OpenAI's access to Reddit's data application programming interface (API), enabling real-time extraction of content from Reddit posts. Reddit expressed anticipation that this partnership would enhance the utilization of Reddit content within ChatGPT and other forthcoming products.

In reciprocity, OpenAI pledges to furnish Reddit users and moderators with a range of innovative AI-driven features, designed to invigorate user engagement on the platform. Furthermore, Reddit designated OpenAI as its newest advertising collaborator, fortifying the strategic alliance between the two entities.

While Reddit observed a 5.45% decline in stock value on May 16, the announcement of the partnership prompted a remarkable 11.05% upsurge in after-hours trading, culminating in a share price of $62.61, as per data from Google Finance. This agreement mirrors Reddit's prior collaboration with Google in February, reportedly valued at $60 million.

Reddit's pursuit of strengthening community engagement and diversifying revenue streams beyond traditional advertising avenues underscores the platform's strategic evolution. However, the alliance with OpenAI occurs amidst a broader legal landscape wherein AI firms, including OpenAI, face mounting legal scrutiny over their data acquisition practices for model training.

Allegations of unauthorized use of copyrighted content and private data have prompted legal action, exemplified by Sony's recent communication to over 700 firms, including OpenAI, Microsoft, and Google, regarding potential copyright infringement.

Notably, Reddit had previously explored innovative avenues such as its blockchain-based rewards service, Community Points, before discontinuing it in October due to scalability concerns. Moreover, Reddit's embrace of cryptocurrencies is evident, with reports indicating holdings of Bitcoin and Ether in its cash reserves, alongside provisions for users to transact in Ether and Polygon's MATIC for certain virtual items.