Meet the Newest Member of the S&P 500. It's Up 365% Since Its IPO, and It Can Keep Climbing From Here.

RDDT joins the S&P 500 following a 365% gain since its IPO, though the stock sold off after second-quarter earnings despite posting 61% revenue growth and 178% earnings-per-share growth. U.S. daily active users declined, sparking concerns about AI-driven search disruption.

Analysts are calling the pullback a buying opportunity. The platform trades at 21 times earnings, a valuation they view as attractive given monetization momentum. Average revenue per user jumped 36% to 51% across geographies in the recent quarter, demonstrating pricing power even as user counts stalled domestically.

Management targets expansion to 100 million U.S. logged-in users, up from current levels, underscoring growth ambitions beyond the recent user headwinds. The combination of S&P 500 inclusion and index-driven demand could provide technical support.

The selloff reflects investor uncertainty about whether Google search integration with AI summaries will erode Reddit's role as a destination for user-generated answers. Revenue growth of 61% suggests monetization is outpacing any user-growth slowdown for now.