On Thursday evening, S&P Dow Jones Indices reported that shares of the social platform Reddit (NYSE: RDDT) will be added to the S&P 500 before the start of trading on August 18. The stock rose more than 12% in premarket trading.
Reddit is entering the benchmark index, seeing a major opportunity ahead to leverage its capabilities to boost advertising sales. People frustrated with low-quality AI solutions and useless AI-generated summaries are already gravitating toward long, human conversations on Reddit, the platform’s co-founder Steve Huffman said in a recent Yahoo Finance interview.
“Reddit is inherently very commercial: forty percent of the conversations people have on Reddit are, in one way or another, about what to buy,” Huffman said. — “They’re not asking what should I buy. They’re asking what to wear, what to watch tonight, where to go, which headphones are best. And because organic content is inherently commercial, placing ads next to it is also a natural step.”
Reddit just reported revenue growth of 61% year over year to 805 million in Q2, driven by a sharp increase in ad revenue as marketers actively engaged with the platform’s user communities. According to Yahoo Finance AlphaSpace analysis, sales have grown by more than 10% over the past 13 quarters. Earnings per share rose 178% to $1.25.