Reddit shares rose 11% in extended trading Thursday after S&P Dow Jones Indices said the company will join the S&P 500 on August 18, replacing AvalonBay Communities. Reddit becomes only the second pureplay social media company in the index, after Meta.
Reddit shares jumped 11% in extended trading on Thursday after S&P Dow Jones Indices announced the stock will join the S&P 500. The company will replace AvalonBay Communities in the index on Aug 18, according to a release from S&P Dow Jones Indices.
Index funds trigger the buying
Stocks often climb when they join major indexes because fund managers who track those benchmarks must buy shares to match the change. Reddit hosts online forums on thousands of topics and becomes only the second pureplay social media company in the S&P 500, after Meta.
Pinterest and Snap both went public before Reddit but remain smaller by market cap, while Twitter left the index after Elon Musk acquired it in 2022 and renamed it X under SpaceX.
Search traffic clouded the earnings picture
Reddit reported second-quarter earnings in late July, revealing its eighth straight quarter of sales growth topping 60%. But the stock tanked after the company told investors: "search referrals were choppy", raising concern about Reddit's reliance on Google for new users.
Steve Huffman, Reddit's CEO, attributed the search volatility to Google increasingly pushing its Gemini-powered AI Overviews. As part of Thursday's changes, Sun Communities will join the S&P MidCap 400, replacing Webster Financial.
Source: CNBC
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