Reddit Inc. struck a deal with Google that will enable the tech giant to use the social media platform’s content to train its artificial intelligence models, Reuters reported Thursday.
The report said the contract, which will allow Google to use the content posted on the platform, is worth $60 million per year for the San Francisco-based company.
That positions the deal as an important new source of revenue for Reddit ahead of an expected initial public offering amid a still uncertain advertising market, which saw steep declines last year.
A Reddit spokesman said the company could not comment on the report. Google did not immediately respond to a request for confirmation.
Earlier this month, Bloomberg reported that Reddit had signed a deal with an AI company but did not name which firm was behind the pact. Reddit executives reportedly told potential investors that it had inked the contract with Google, which could telegraph an ability to profit from Wall Street’s growing enthusiasm for AI — the S&P 500 was up 1.5% in morning trading Thursday on the strength of AI chipmaker Nvidia’s fourth quarter report — and gather some momentum for the IPO.
Shares of Google parent Alphabet rose 1.2% in the morning session, to $145.57. The stock closed Monday up about 3% since the start of the year.
Reddit’s revenue rose about 20% in 2023 to top $800 million last year, Bloomberg reported, citing people familiar with the matter.
While Reuters noted that a 2021 funding round valued the company at $10 billion, Reddit has been advised to shoot for a $5 billion valuation as it debuts on the stock market, Bloomberg said.
The IPO is expected to launch next month, though Reddit so far has not filed any new materials with the Securities and Exchange Commission, a necessary step before it can sell any stock. Reuters reported a filing could land as early as Thursday.
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