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

Reddit Inc. (NYSE:RDDT) shares rose 12.63 percent Friday to close at $178.09 after S&P Dow Jones Indices announced that the company will join the S&P 500 on Tuesday, August 18. Reddit will replace AvalonBay Communities, which is being acquired by Equity Residential, already an S&P 500 constituent. Chief Financial Officer Drew Vollero said the inclusion recognized Reddit’s “growth, momentum, and consistency” as a public company. He added that Reddit’s “raw materials are special,” with significant potential to build products and scale profitably, while management remains focused on executing against the opportunities ahead. Index inclusion can increase exposure to funds and global investors because portfolios tracking the benchmark must rebalance to include new constituents. That expected demand helped support Friday’s advance, although the announcement followed strong operating results. Reddit reported its eighth consecutive quarter of revenue growth in the second quarter. Net profit more than doubled to $253 million from $89 million year over year, while revenue increased 61 percent to $805 million from $500 million. Advertising revenue rose 64 percent to $762 million, and other revenue increased 24 percent to $43 million. The stock has a moderate buy rating from 23 analysts. Phillip Securities issued the most bullish of the three latest coverages this month, assigning a buy rating and a $230 price target, representing 29 percent upside from the latest closing price. JPMorgan and Roth MKM both rated the shares hold, with targets of $185 and $145, respectively. Institutional sentiment has weakened. Insider Monkey reported that 70 hedge funds held Reddit in the first quarter, down from 82 in the fourth quarter of 2025. The decline, alongside differing price targets, indicates that investors remain divided over Reddit’s growth outlook. The source also states that certain AI stocks may offer greater upside and less downside risk, including an extremely undervalued AI stock positioned to benefit from Trump-era tariffs and the onshoring trend. Disclosure: None.