Key Stats for Reddit Stock
- Price change for Reddit stock in last 1 year: -35%
- $RDDT Stock Price as of Aug. 13: $158
- 52-Week High: $283
- $RDDT Stock Price Target: $216
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What Happened?
Reddit (RDDT) stock jumped 10% in extended trading on Thursday after S&P Dow Jones Indices announced Reddit will join the S&P 500 on August 18. Reddit is replacing AvalonBay Communities in the index.
Getting added to a major index like the S&P 500 often boosts a stock. Fund managers who track the benchmark must buy shares to match the change, creating extra demand.
With this addition, Reddit becomes only the second pure-play social media company in the S&P 500, joining Meta. Other social platforms like Pinterest and Snap are smaller by market cap and haven’t made the cut, while Twitter, now called X, left the index after Elon Musk’s SpaceX acquired it in 2022.
The news comes at an interesting moment for Reddit stock. The company reported Q2 earnings in late July, marking its eighth straight quarter of sales growth above 60%.
Revenue hit $805 million, up 61% year-over-year, with advertising revenue reaching $762 million, up 64%. Adjusted EBITDA margin came in at 43%, and the company crossed $1 million in revenue per employee for the first time.
Despite those strong numbers, Reddit stock actually fell after that earnings report. The issue was search referral traffic, which CEO Steve Huffman described as choppy during the quarter.
That comment reignited concerns about how much Reddit still depends on Google for bringing in new users. Huffman pointed to Google’s growing use of Gemini-powered AI Overviews as a factor behind the volatility.
Reddit has said its visibility in search results remains low and it expects that to stay unpredictable going forward.
Even with that search traffic headwind, Reddit’s underlying business kept performing well.
New app user retention was up 50% year-over-year on a relative basis, and the company crossed $0.5 billion in weekly users, including more than 130 million daily.
Management has continued to stress that direct, repeat users from the app are far more valuable than one-time visitors coming through search links, and that’s where the company’s product efforts are focused.
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What the Market Is Telling Us About Reddit Stock
The strong after-hours reaction shows investors see index inclusion as a meaningful catalyst for Reddit stock, separate from the day-to-day questions about search traffic.
Passive fund buying tends to create real demand for shares, and becoming just the second standalone social media company in the S&P 500 is a notable milestone for a company that only went public a couple years ago.
That said, this news doesn’t erase the underlying debate around Reddit’s growth story.
The company’s ad business keeps growing at a fast pace, but the market has shown it’s still sensitive to any sign of softness in user growth, especially anything tied to Google search referrals.
For now, though, the S&P 500 news is giving Reddit stock a clear near-term lift, even as investors continue watching how the company navigates its reliance on outside traffic sources.
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Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any stocks mentioned. Thank you for reading, and happy investing!
