NEW YORK (AP) — Reddit will join the S&P 500 next week, giving the wide-ranging online forum a boost in prestige and investments.
Joining the S&P 500 is considered an achievement for a company because the index is a widely followed measure of the broader U.S. stock market’s health. A company is selected for the index based on several criteria that demonstrate stability, including market size and consistent profitability.
Reddit's stock surged nearly
14% around midday Friday.
Aside from status, inclusion means more investments. The index tracks 500 of the biggest U.S. stocks, and trillions of dollars in investments benchmark themselves against it. Those investments include mutual funds and exchange-traded funds. Essentially, those funds will have to buy the stock once it becomes part of the index that the fund is tracking or mimicking.
Investors are depending more than ever on funds that simply mimic indexes such as the S&P 500. It’s a lower-cost way to invest, allowing savers to keep more of their investments. Partly because of that, such index funds have usually proven to be better performers than funds that try to pick and choose individual stocks.
Reddit will join the benchmark index as of Tuesday. A stock must trade publicly for at least 12 months to join the S&P 500. The operator of the index, S&P Dow Jones Indices, stuck to that guideline recently when it declined to fast-track SpaceX into the index after the space exploration company's massive initial public offering in June.
Reddit's inclusion comes weeks after it posted strong financial results for the second quarter. That included its highest-ever quarterly revenue. The company has been posting profits almost every quarter since it went public in 2024.
Wall Street expects profits to more than double overall in 2026 on a surge in revenue.
