Shares of social media platform Reddit jumped more than 12 per cent in premarket trading on Friday after S&P Dow Jones Indices said the company would join the benchmark S&P 500 index, replacing AvalonBay Communities.
Analysts at J.P.Morgan estimate index funds tracking the S&P 500 .SPX could need to buy 16.7 million Reddit shares.
That is nearly three times the stock’s average daily trading volume of about 5.98 million shares since the company went public in March 2024, according to LSEG data.
Reddit shares were last up 12.6 per cent at US$177.97, with more than US$28.9 million worth changing hands by 5:24 a.m. ET.
The stock has fallen more than 31 per cent this year through Thursday’s close and is down more than 42 per cent from its all-time high reached in September 2025.
In its most recent earnings report, Reddit said choppy search-engine traffic hurt U.S. user growth in the second quarter, overshadowing an upbeat revenue forecast.
AvalonBay is being removed after agreeing in May to an all-stock merger with Equity Residential EQR.N to form a rental housing company with an enterprise value of US$69 billion. The companies have said the deal is expected to close in the second half of 2026.
The combined company, to be called Vivmark Residential, will remain in the S&P 500 after the merger is completed, S&P Dow Jones Indices said.
Stephens analyst Melissa Roberts said new S&P 500 additions have historically outperformed the benchmark from announcement to inclusion, with the biggest gains coming the day after the announcement.
After inclusion, however, they have typically given back some gains and lagged the benchmark over the next three months by about 2 per cent.
(Reporting by Shashwat Chauhan in Bengaluru; Editing by Tasim Zahid)
