Reddit is joining the S&P 500. The online forum-turned-media giant will be added to Wall Street's benchmark index before markets open on Tuesday, August 18, S&P Dow Jones Indices announced Thursday — and traders wasted no time celebrating.

Shares of Reddit (NYSE: RDDT) jumped 11% in after-hours trading the moment the announcement hit Thursday, then surged again Friday morning, climbing as much as 15% to around $182 a share, according to Forbes. The rally reflects a well-worn Wall Street pattern: index funds that track the S&P 500 are now obligated to buy Reddit shares to match the benchmark, creating a wave of forced demand.

Reddit is replacing AvalonBay Communities, the apartment REIT being dropped from the index because its pending acquisition by Equity Residential will make it ineligible for inclusion, according to CNBC. The swap is what's known on Wall Street as an off-cycle index change, triggered by the M&A deal rather than S&P's regular quarterly rebalancing.

A Milestone for a Once-Struggling IPO

The inclusion marks a turnaround for a company that spent much of its early life as a public business proving skeptics wrong. Reddit went public in March 2024 at a valuation that drew plenty of doubters given the company's history of thin profitability, but a string of stronger earnings reports and rising advertising and licensing revenue — including data-licensing deals tied to AI companies training on Reddit's forums — have reshaped Wall Street's view of the stock over the past two years.

REDDIT BECOMES ONLY THE SECOND PURE-PLAY SOCIAL MEDIA COMPANY IN THE S&P 500, JOINING META.

That status as one of just two standalone social platforms in the index — alongside Meta, which also owns Instagram and WhatsApp — underscores how few social media companies have managed to hit the scale, profitability and market-cap thresholds S&P requires for inclusion. Rivals like Snap and Pinterest remain outside the index.

Analysts covering the stock said the inclusion should meaningfully broaden Reddit's investor base beyond growth-focused tech funds, pulling in a wider swath of passive and income-oriented capital that mirrors ownership patterns across the rest of the index.

What's Next

Index funds and ETFs tracking the S&P 500 will need to add Reddit shares to their portfolios ahead of Tuesday's effective date, a mechanical buying process that analysts say could keep providing tailwind support for the stock through the transition. Reddit's next quarterly earnings report will be the first real test of whether the company can hold on to its newly elevated Wall Street status.