Key facts
- Reddit will be added to the S&P 500 index on August 18.
- Reddit's growth is fueled by data-licensing deals with AI companies.
- Google and OpenAI are among the AI companies licensing Reddit's data.
- Reddit also generates revenue from advertising.
- Reddit shares jumped over 12% in premarket trading after the announcement.
- Reddit will replace AvalonBay Communities in the S&P 500.
- Index funds may need to purchase millions of Reddit shares.
Reddit is scheduled to be added to the S&P 500 index on August 18, a move that underscores its significant growth and transition from a popular internet forum to a prominent U.S. publicly traded company. The social media platform's recent surge in value and market presence is attributed to a combination of factors, including substantial data-licensing agreements with major artificial intelligence companies like Google and OpenAI. These deals allow AI developers to train their models using Reddit's vast repository of user-generated content. Alongside these AI data partnerships, Reddit continues to generate revenue through its traditional advertising business.