Reddit Jumps 11% on S&P 500 Inclusion
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- Reddit shares rose 11% in extended trading Thursday after S&P Dow Jones Indices announced its inclusion in the S&P 500, with the company set to join the index Aug 18 and replace AvalonBay Communities.
- Reddit becomes only the second pureplay social media company in the S&P 500, alongside Meta — Pinterest and Snap went public earlier but are smaller by market cap, while Twitter was removed after Elon Musk's 2022 acquisition.
- Fund managers who track the S&P 500 must buy shares to match benchmark changes, which the source notes typically drives stock climbs when companies are added.
- Reddit reported its eighth straight quarter of sales growth topping 60% in late July, but the stock tanked when executives flagged "choppy" search referrals, with CEO Steve Huffman attributing the volatility to Google's push of Gemini-powered AI Overviews.
- As part of the same announcement, Sun Communities will join the S&P MidCap 400, replacing Webster Financial.
Why it matters: Fund managers who track the S&P 500 must buy Reddit shares to match the benchmark when it joins Aug 18, a buying mechanism that drove the 11% after-hours jump. That lift comes against a backdrop of Reddit's eighth straight quarter of 60%+ sales growth and CEO Steve Huffman's warning that Google's Gemini AI Overviews are destabilizing search referrals.
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