Topline

Reddit will join the S&P 500 next week, replacing a real estate investment trust on the index in a move that would force index-tracking funds managing trillions of dollars to buy shares in the social media platform, spurring automatic demand for the stock that has plunged so far this year.

Key Facts

Reddit, trading under the “RDDT” ticker, will be added to the S&P 500 before markets open on Aug. 18, the S&P Dow Jones Indices announced Thursday.

The social media platform’s stock will replace AvalonBay Communities, which is being removed from the S&P 500 because of its acquisition by Equity Residential EQR, making it ineligible for the index.

Inclusion in the S&P 500 would add Reddit to index-tracking funds, including the Vanguard S&P 500 ETF and BlackRock’s iShares Core S&P 500 ETF, as well as mutual funds like the Fidelity 500 Index Fund and the Schwab S&P 500 Index Fund, exposing the stock to a broader pool of investors.

Shares of Reddit surged 15% to $182 shortly after trading opened Friday.

surprising fact

Tesla shares surged 60% between the announcement of its S&P 500 inclusion and its addition to the index in December 2020, marking one of the largest inclusion-driven rallies on record, according to Charles Schwab. Other stocks don’t hold onto an index-driven bump, however: Workday, which jumped nearly 10% on news of its inclusion, dropped 19% from its peak after joining the index in December 2024.

key background

Reddit went public in March 2024 as one of the most closely watched tech listings of the year, marking a milestone for the firm in a turnaround that has since made the social media platform profitable. The company benefited from its best trading day ever in October 2024, as Wall Street applauded Reddit’s growing daily user base and new advertising products from deals with Google and OpenAI. Inclusion in the S&P 500 requires companies to be profitable for the prior four quarters and to meet certain market capitalization requirements.