Reddit shares surged more than 12 percent on the news. S&P Dow Jones Indices said the company will join the S&P 500 on August 18. Reddit replaces AvalonBay Communities in the benchmark index. The stock climbed further after hours. Some reports put that after-hours gain above 15 percent.

AvalonBay is being acquired by fellow S&P 500 member Equity Residential. Once that deal closes, the combined company will drop both legacy names. It will rebrand as Vivmark Residential, trading under the ticker VMRK. The new entity keeps its place in the index rather than exiting it. That is the slot going to Reddit.

Index inclusion typically drives buying from funds that track the S&P 500. Those funds must hold every company in the index, weighted by market value. For a stock like Reddit, that is a real milestone. Reddit went public in March 2024. Many newly listed tech companies take years to reach the S&P 500, if they reach it at all.

Reddit has posted strong earnings since its listing. Growth has come from advertising and from licensing deals. Those deals let AI companies train models on Reddit’s forum data. OpenAI chief executive Sam Altman is a longtime Reddit board member and early investor. He owns roughly 12.2 million shares. That stake is now worth more than a billion dollars.

Reddit’s next earnings report is scheduled for November 4. Analyst sentiment has been largely positive heading into the index addition. Most Wall Street coverage rates the stock a buy. The average 12-month price target sits near current trading levels. The inclusion caps a period of sustained gains for Reddit shares this year. The company has leaned on AI data licensing as a second revenue stream alongside advertising.

Reddit begins trading in the S&P 500 before markets open on August 18. That is the same day the AvalonBay-Equity Residential merger closes. The combined company adopts its new name and ticker that morning.