Reddit shares rose 11% in extended trading on Thursday on the social media company’s inclusion in the S&P 500.
The company will join the index on Aug 18, replacing AvalonBay Communities, according to a release from S&P Dow Jones Indices.
Companies often see their stocks climb when they’re added to major indexes because fund managers who trace the benchmarks have to buy shares to match the changes.
Reddit, which hosts online forums on thousands of topics, becomes only the second pureplay social media company in the S&P 500. Meta, one of the world’s most valuable companies is the other.
Pinterest and Snap both went public long before Reddit, but they’re smaller by market cap. Twitter was in the S&P 500 until it was acquired by Elon Musk in 2022. It’s now called X and is owned by SpaceX.
Reddit reported second-quarter earnings in late July and revealed its eighth straight quarter of sales growth topping 60%. But the stock tanked after the company told investors that its “search referrals were choppy,” bolstering 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 announced changes, Sun Communities will join the S&P MidCap 400, replacing Webster Financial.
Read the original article here