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Reddit shares rise as it joins the S&P 500 next week
The index change takes effect Tuesday, August 18, replacing AvalonBay Communities, and Reddit shares jumped 12.6% to $178.09 after the move was announced.
Reddit Inc. will join the S&P 500 starting Tuesday, August 18, replacing AvalonBay Communities, according to an updated report from S&P Dow Jones Indices cited by Yahoo Finance. The change follows announcements that AvalonBay is set to be acquired by Equity Residential, another S&P 500 constituent.
On Friday, Reddit shares climbed 12.6% to close at $178.09, after the company was slated for inclusion next week. Yahoo Finance said additions to major benchmark indices typically lead to share price gains as funds that track the index rebalance their portfolios.
Yahoo Finance also linked the S&P 500 move to Reddit’s recent results, noting its second quarter revenue marked its eighth straight quarter of growth. During the quarter, net profits more than doubled to $253 million from $89 million a year earlier, while revenues rose 61.0% to $805 million.
The article further reported that ad revenues increased by 64.0% to $762 million, while other revenues improved 24.0% to $43 million. It also cited one recent bullish stance, with Phillip Securities issuing a buy call and a $230 price target, while Yahoo Finance said JPMorgan and Roth MKM issued hold ratings with $185 and $145 targets respectively.
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