Reddit stock was falling back on Friday after rising on its first day of trading. A successful initial public offering by a social media company could pave the way for more IPOs, especially those that can argue their relevance to artificial intelligence.
Shares of Reddit were down 7.4 percent at $46.72 in morning trading. That’s still well above the offer price of $34 per share, which should fuel appetite for more listings.
Whether the success will last is an open question.Baron’s has argued that Reddit will struggle to reach profitability after booking a net loss of $90.8 million for 2023. What seems clear, however, is that AI plays continue to appeal to the market, with Reddit pointing to licensing its data to Alphabet.
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Google is the source of future income.
“The value of our data is increasing. In a world where more and more content on the Internet is created by artificial intelligence, the premium on the real intelligence that is Reddit continues to grow,” Reddit CEO Steve Huffman said in an interview with CNBC on Thursday.
Appetite for AI plays is also in evidence with server-infrastructure company Astera Labs.
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Its stock was up 7.4% at $68.92 in morning trading on Friday, capitalizing on massive gains this week after pricing its first IPO at $36 a share.
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Microsoft agreed to pay $650 million to retain Inflection AI staff.
Microsoft
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The acquisition of artificial intelligence startup Inflection AI has raised plenty of eyebrows. Now more details are coming out.
Earlier this week, Microsoft hired Inflection AI CEO Mustafa Sulaiman as its own in-house AI chief, while also poaching the majority of its employees. This was strikingly similar to OpenAI’s plan to bring most of the company’s workforce in-house last year when CEO Sam Altman was briefly fired from developer ChatGPT. which was discontinued upon Altman’s return to the company.
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That begs the question of why Microsoft hasn’t tried to acquire Inflection AI, which has raised more than $1.5 billion from investors, and is now moving its business away from consumer products and into enterprises. is planning to divert services to
Microsoft has agreed to pay Inflection AI $650 million as part of a licensing fee, according to the Wall Street Journal, citing a person familiar with the matter. Investors in Inflection AI will be paid with license proceeds over time.
Microsoft’s partnership with OpenAI is already under scrutiny from regulators. It looks like there will also be questions over its relationship with Inflection AI as authorities race to keep the AI ​​market afloat.
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Microsoft did not immediately respond to a request for comment. Baron’s Friday. It has previously said that Inflection AI will remain independent and that the deal is not an acquisition. Shares of Microsoft were down 0.4 percent in morning trading.
Write to Adam Clark at adam.clark@barrons.com.