Shares of social media platform Reddit Inc. surged nearly fourteen percent in morning trading after S&P Dow Jones Indices announced the company’s inclusion in the S&P 500 index. Reddit will replace AvalonBay Communities prior to the market open on Tuesday, August eighteenth.

The company’s shares are trading at one hundred seventy-eight dollars and twenty-six cents, significantly higher than the previous session’s close. This rally was driven by strong mechanical demand from passive index funds required to purchase shares of the new index constituent.

According to J.P. Morgan estimates, passive funds may need to buy approximately sixteen point seven million Reddit shares. This is nearly three times the company’s average daily trading volume since its initial public offering in March twenty twenty-four.

The inclusion in the S&P 500 comes alongside the merger of AvalonBay Communities and Equity Residential. Reddit will become only the second pure-play social media stock in the benchmark alongside Meta, securing passive investment inflows despite ongoing investor concerns regarding slowing search traffic.