Reddit surges on S&P 500 inclusion

Reddit's stock surged by over 12% in pre-market trading on August 14 after the S&P Dow Jones Indices announced the social media platform would join the S&P 500 index, replacing AvalonBay Communities. J.P. Morgan analysts estimated that index funds tracking the S&P 500 could need to purchase 16.7 million Reddit shares, which is nearly three times the stock's average daily trading volume of about 5.98 million shares since its public debut in March 2024.

Reddit's shares were last trading up 12.6% at US$177.97, with more than US$28.9 million worth of shares changing hands by 5:24am ET on August 14. The stock has dropped more than 31% in 2024 and is down more than 42% from its all-time high reached in September 2025.

In its most recent earnings report, Reddit cited challenging search-engine traffic as a factor behind its US user growth decline in the second quarter, despite delivering an optimistic revenue forecast. AvalonBay is being removed from the index after it agreed to an all-stock merger with Equity Residential, forming a rental housing company with an expected valuation of US$69 billion. The newly merged entity, called Vivmark Residential, will remain in the S&P 500 following the merger's completion in the second half of 2026.

Analyst Melissa Roberts from Stephens noted that new S&P 500 additions have typically outperformed the benchmark from the announcement until inclusion, with the most significant gains occurring the day following the announcement. However, they have generally underperformed the benchmark over the subsequent three months by approximately 2%.