Reddit (RDDT) Is Joining the S&P 500 —What’s Next for the Company?

Reddit Inc. (RDDT) experienced a 12.63% surge in its share price to $178.09 following an announcement that it would join the S&P 500 starting next week. The S&P Dow Jones Indices revealed on Thursday that Reddit would become a member on August 18, replacing AvalonBay Communities, which will be acquired by Equity Residential, another S&P 500 member.

In an updated report, Reddit's CFO Drew Vollero expressed pride in the company's growth, momentum, and consistency, while highlighting the potential for further product development and profit scaling. Reddit's inclusion in the index is likely to attract more funds and global investors due to the typical sharp increase in share prices experienced by companies added to benchmark indices.

Reddit's membership comes after strong performance in the second quarter of the year, with revenues growing for the eighth consecutive quarter. Net profits doubled to $253 million, and revenues increased by 61% to $805 million. This growth was fueled by a 64% jump in ad revenues to $762 million and a 24% rise in other revenues to $43 million.

Currently, Reddit holds a moderate buy rating from 23 analysts, with the most bullish stance from Phillip Securities, predicting a $230 price target, or a 29% upside potential. JPMorgan and Roth MKM issued hold ratings, with price targets of $185 and $145, respectively. However, institutional investors appear cautious about Reddit's long-term growth prospects due to a decline in hedge fund ownership and combined holdings.

Insider Monkey data shows that 70 hedge funds held positions in Reddit as of the first quarter, down from 82 in the fourth quarter of 2025. Conviction among professional investors fell by 46% to $2.86 billion, signaling a decline in confidence and limited committed funds. The upcoming third quarter will be crucial in determining whether Reddit's inclusion in the S&P 500 has positively impacted institutional sentiment and attracted hedge fund backing.