Reddit shares jumped in extended trading on Thursday after the social media company was selected for inclusion in the S&P 500 index.
The stock gained 12.5% after S&P Dow Jones Indices announced that Reddit will join the benchmark on 18 August, replacing AvalonBay Communities.
Shares often rise when companies are added to major stock indexes as funds tracking the benchmarks are required to purchase the stock to reflect the changes.
Reddit, which hosts online communities covering thousands of topics, will become only the second pure-play social media company in the S&P 500, following Meta.
Reddit reported second-quarter earnings in late July, recording its eighth consecutive quarter of revenue growth above 60%.
However, the stock fell sharply after the company warned that its "search referrals were choppy", raising concerns about its reliance on Google to attract new users.
Reddit CEO Steve Huffman attributed the volatility in search traffic to Google's increasing use of its Gemini-powered AI Overviews.
