Reddit’s S&P 500 debut could unleash nearly $3 billion of index-fund buying

Reddit (RDDT) is set to join the S&P 500 index before the market opens on August 18, replacing AvalonBay Communities (AVB). Analysts estimate that index funds tracking the benchmark will need to buy around 16.7 million Reddit shares to reflect the adjustment, which could result in nearly $2.9 billion in stock purchases at the current price of about $175.69 per share.

This is a substantial amount of buying potential for a company that had an average daily trading volume of around 5.98 million shares since its March 2024 IPO. Shares surged more than 11% following the announcement of the S&P 500 inclusion. The situation presents a unique scenario for investors, as Reddit's stock has been down over 31% this year and 42% from its all-time high in September 2025.

Despite the significant drop, the impending addition to the S&P 500 brings a new demand for the stock, which could provide temporary support after the initial rebalancing period. However, the question remains whether this mechanical demand will offer lasting support for the stock beyond the rebalancing period. Reddit's inclusion in the S&P 500 marks a major milestone for the company, which has transformed from an IPO newcomer to one of the 500 firms listed in the most-watched U.S. equity benchmark in just over two years.