Reddit's stock will be included in the S&P 500 index before trading begins on August 18. According to JP Morgan estimates, this change will force index funds to purchase 16.7 million shares of the company.
On Friday, the stock surged more than 11% after S&P Dow Jones Indices confirmed this move.
S&P Index Lags Benchmark by 2% After Three Months
Since its launch in March 2024, Reddit (RDDT) stock has traded an average of 5.98 million shares per day. Passive funds need to buy 16.7 million shares, which is roughly equivalent to three full trading sessions of normal activity, squeezed into the rebalancing process.
The stock price was around $175.69, and over $201 million worth of trades had been executed by 9:32 AM ET on Friday. Later, according to intraday data, Reddit's stock rose 14.55% to reach $181.12.
Stephens analyst Melissa Roberts noted that new companies added to the S&P 500 have historically outperformed the index from the announcement date until their actual inclusion, with the biggest movement typically occurring the day after the news is announced.
The expert stated that once the shares are already purchased, the resulting gains tend to disappear, and over the following three months, growth volumes have lagged the benchmark by approximately 2%.
Reddit is taking the place of AvalonBay Communities (AVB). This apartment market operator is exiting the index following a merger with Equity Residential (EQR), which was agreed upon in May and involves a stock swap.
The value of this deal is estimated at approximately $69 billion, and it is expected to be completed in the second half of 2026.
S&P Dow Jones Indices stated that the combined company, which will be named Vivmarkdent, will retain AvalonBay's spot in the S&P 500 index after the deal's completion.
Reddit Reports $253 Million Profit, But This Year's Earnings Fall 31%
After a challenging year, Reddit's stock became one of the growth leaders. As of Thursday's close, its value had fallen more than 31% by 2026, declining over 42% from the all-time high reached in September 2025.
According to Cryptopolitan, the company reported a second-quarter net profit of $253 million on revenue of $805 million, which is 61% higher than a year ago and marks the eighth consecutive quarter of growth exceeding 60%.
The social media platform raised its revenue forecast, but volatile transitions from search engines negatively impacted user growth in the US at the end of the reporting period.
"Referral traffic transparency remains low," CEO Stephen Huffman told analysts, adding that AI-generated Google reviews have not yet replaced the traditional search links that Reddit relies on.
Reddit joins a list increasingly dominated by just a few large technology companies.
As Cryptopolitan previously reported, stocks of companies related to artificial intelligence currently account for approximately 45% of the S&P 500 index's market capitalization, making the index more vulnerable to price fluctuations of a few individual firms.
