Reddit RDDT-N shares jumped more than 11 per cent on Friday after the S&P Dow Jones Indices said the social media platform would join the benchmark S&P 500 index, replacing AvalonBay Communities AVB-N.
Analysts at J.P. Morgan estimate index funds tracking the S&P 500 would 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 was trading at US$175.69, with shares worth more than US$201 million changing hands by 09:32 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.
The changes are effective before markets open on Aug. 18.
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.