Reddit Shares Surge on S&P 500 Inclusion Later This Month

Reddit Inc. will join the S&P 500 next week as part of an off-cycle change, S&P Dow Jones Indices said Thursday, sending the social networking platform’s shares surging more than 10% after the bell.

Reddit will be added to the benchmark gauge prior to the start of trading on Aug. 18, according to the index provider. It replaces AvalonBay Communities Inc., which is being acquired by fellow S&P 500 member Equity Residential.

San Francisco-based Reddit, which went public in March 2024, has been investing in advertising technology, hoping to grow its share of the digital ads business dominated by industry giants Meta Platforms Inc. and Alphabet Inc.’s Google.

Since the IPO, the company’s sales have grown at a steady clip. In July, it posted its eighth consecutive quarter of more than 60% revenue growth. Still, investors have hoped to see Reddit seize new money-making opportunities amid the artificial intelligence boom. Though it’s struck deals worth hundreds of millions of dollars with OpenAI and Google, which have trained their AI models on the web forum’s proprietary data, investors had hoped for more agreements. Its shares were down 31% year-to-date through Thursday’s close.

The growth of passive investing has elevated the importance of inclusion in the S&P 500. Companies must have a market capitalization of at least $22.7 billion and meet profitability, liquidity and share-float requirements to qualify for the gauge, according to July guidelines.

In June, Marvell Technology Inc. and Flex Ltd. joined the S&P 500, replacing Pool Corp. and Campbell’s Co.