RDDT Stock Jumps 11% After-Hours — What's Driving The Rally?

• Inclusion in the S&P 500 typically triggers buying from passive funds and index trackers. 
• The index inclusion comes weeks after Reddit reported strong second-quarter results on July 30, including a 61% jump in revenue. 
• In a related move, Sun Communities Inc. (SUI) will replace Webster Financial Corp. (WBS) in the S&P MidCap 400.

Shares of Reddit (RDDT) surged as much as 11% in after-hours trading on Thursday after S&P Dow Jones Indices announced the social media company will join the S&P 500.

S&P 500 Addition

Reddit Inc. will replace AvalonBay Communities Inc. (AVB) in the S&P 500 effective prior to the opening of trading on Tuesday, August 18. S&P 500 constituent Equity Residential (EQR) is acquiring AvalonBay in a deal expected to close soon, pending final conditions. After the merger, the combined company will be renamed Vivmark Residential (VMRK).

Inclusion in the S&P 500 typically triggers buying from passive funds and index trackers required to hold every constituent, often providing a near-term demand boost for the newly added stock.

Reddit Business Momentum

The index inclusion comes just a couple of weeks after Reddit reported strong second-quarter results on July 30.

Revenue rose 61% year-over-year to $805 million—its eighth consecutive quarter of growth above 60%—driven by advertising revenue of $762 million, up 64%. Net income reached $253 million, or $1.25 per diluted share, more than doubling from a year earlier.

The company ended the quarter with $2.8 billion in cash and marketable securities and repurchased 1.5 million shares for $235 million. For the third quarter, Reddit guided to revenue of $860–$870 million and adjusted core profit of $385–$395 million.

SUI To Join S&P MidCap 400

In a related move, Sun Communities Inc. (SUI) will replace Webster Financial Corp. (WBS) in the S&P MidCap 400 effective prior to the open on Thursday, August 20, S&P Dow Jones Indices said. Banco Santander is acquiring Webster in a transaction expected to close soon.

SUI stock rose 3% after hours at the time of writing. 

How Did RDDT Retail Traders React?

On Stocktwits, retail sentiment around RDDT stock rose from ‘bearish’ to ‘neutral’ over the past 24 hours, while message volume stayed at ‘low’ levels.

A Stocktwits user expressed optimism that the stock could hit $600 by next year.

Another user highlighted the recent string of positive developments for Reddit stock, including favorable developments in one of Reddit’s ongoing lawsuits against AI companies like Anthropic or Perplexity for allegedly scraping Reddit content without permission. However, no ruling has been issued in the lawsuit yet.

RDDT stock has fallen 31% year-to-date. 

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