Reddit Joins S&P 500: Massive Index Fund Buying Spree Triggers Record Surge

Warning: Reddit's (RDDT) inclusion in the S&P 500 on August 18 is set to trigger a massive, forced buying spree that could send the stock soaring over 11% before a potential 10% correction, market analysts warn. Index funds tracking the benchmark are compelled to snap up approximately 16.7 million shares to mirror the new index composition, a volume nearly three times the stock's average daily trading activity compressed into a single rebalancing window.

In brief

• Reddit will join the S&P 500 before the market opens on August 18.
• JPMorgan estimates the necessary purchases at about 16.7 million shares.
• The stock remains down more than 31% since the beginning of 2026.

The S&P 500 opens its door to Reddit

S&P Dow Jones Indices announced the change on August 13. Reddit will replace AvalonBay Communities. The S&P 500 had already welcomed Coinbase in May 2025. This entry forces funds that replicate the index to adjust their portfolios.

JPMorgan estimates they will need to acquire about 16.7 million Reddit shares. Since its IPO in March 2024, the stock has averaged nearly 5.98 million shares traded per session. Almost three days’ worth of volume.

The announcement has already had its effect. Reddit gained more than 11% on Friday. The official entry will take place before Wall Street opens on August 18. From that date, Reddit will be among the companies used to calculate one of the most followed stock indices in the world.

Reddit arrives after a complicated year

The rise caused by the S&P 500 announcement is not enough to erase recent months. Reddit remains down more than 31% since the start of 2026 and shows a decline of over 40% compared to its historic high in September 2025.

The financial results tell a different story. In the second quarter, Reddit posted $805 million in revenue, up 61% year over year, for $253 million in net profit.

In 2025, its revenues had already exceeded $2 billion with an annual growth of 69%. Net profit reached $530 million. Not really a company at a standstill.

Reddit nevertheless must manage a significant dependency on traffic from search engines. Steve Huffman himself acknowledges that visits from Google remain difficult to predict with the rise of AI-generated direct answers.

Meanwhile, the U.S. market continues to trade near its highs. The S&P 500 had set new records again this summer. Reddit thus enters the index with a weakened price, but still strong revenue growth.

The 16.7 million shares guarantee nothing

An entry into the S&P 500 causes mechanical buys. Index funds must hold the new stocks to continue to properly replicate the index. That’s where the 16.7 million shares estimated by JPMorgan come from.

The phenomenon, however, does not last forever. New companies in the S&P 500 often tend to rise between the announcement and their official entry. Once the index purchases are done, financial results quickly regain the upper hand.

Some historical data even show an average underperformance of new stocks in the months following their inclusion.

Reddit is therefore already experiencing part of the S&P 500 effect. The jump of more than 11% happened immediately after the announcement. The platform joins a list of tech companies closely followed that have recently passed this step. Robinhood joined the S&P 500 in 2025 after several months of speculation. For Reddit, August 18 should bring an unusual wave of purchases. Nearly three normal volume sessions could concentrate around the rebalancing. After that, back to the numbers.

Maximize your Cointribune experience with our "Read to Earn" program! For every article you read, earn points and access exclusive rewards. Sign up now and start earning benefits.