Although Wall Street loves a clean catalyst, and index inclusion is about as clean as they come, the record of the past year suggests the party rarely lasts. Reddit (NYSE:RDDT | RDDT Price Prediction) is trading roughly 11% higher in Friday premarket after S&P Dow Jones Indices announced Thursday that the company will join the S&P 500 later this month, replacing AvalonBay Communities. The mechanical buying drives real demand: JPMorgan estimates index funds could need to purchase 16.7 million Reddit shares, nearly three times the stock’s average daily volume of about 5.98 million shares since its March 2024 IPO.
The question retail investors ought to ask is whether the pop lasts. The last twelve competitively selected additions to the benchmark S&P 500 offer a sobering answer. As we previously covered in our coverage of index-inclusion trades, the announcement move often overstates the durable rerating.
The June 2026 Class: The Freshest and the Worst
Start with the most recent additions, because the ink is barely dry. Marvell Technology and Flex both joined effective June 22, 2026, replacing Pool and Campbell’s. Both have been punished. Marvell Technology (NASDAQ:MRVL) fell 9.78% in its first week, 31.45% in the first month, and sits 27.81% below its inclusion price. Flex (NASDAQ:FLEX) squeaked out a 2.41% first-week gain, then dropped 18.49% in month one and is now down 20.22% since joining. Two for two, underwater.
The March 2026 Class: An Nvidia Story in Disguise
The March cohort looks better at a glance, but the wiring underneath matters. Vertiv, Lumentum, Coherent and EchoStar joined effective March 23, 2026, replacing Match Group, Molina Healthcare, Lamb Weston and Paycom.
The week-one performance was ugly: Vertiv Holdings (NYSE:VRT) fell 8.51%, Lumentum Holdings (NASDAQ:LITE) dropped 10.17%, and Coherent (NYSE:COHR) tumbled 13.88%. Only EchoStar (NASDAQ:SATS) escaped, gaining 2.50%. All four then rallied in month one, and Vertiv (+12.16%), Lumentum (+20.78%) and Coherent (+28.30%) sit in the green since addition. EchoStar is down 16.27%.
Here is the caveat that flatters the average: Coherent’s and Lumentum’s post-inclusion gains are substantially driven by Nvidia news rather than index flows. Nvidia announced a $2 billion investment in each company the week before their March addition. Strip that out and the March class looks a lot less like an index-inclusion win.
December 2025 and September 2025: Split Decisions
Move back further and the pattern gets no cleaner. In the December 2025 class, Carvana (NYSE:CVNA) is down 15.01% since addition, CRH (NYSE:CRH) is down 22.02%, and only Comfort Systems USA (NYSE:FIX) has delivered, gaining a booming 81.97%. Week one for that entire class was essentially flat: Carvana at -0.01%, Comfort Systems at -0.01%, CRH at +0.90%.
The September 2025 class is the mixed record extended over a longer runway. AppLovin (NASDAQ:APP), the poster child for the inclusion pop, ripped 10.70% in week one and has since collapsed 51.41%. Robinhood Markets (NASDAQ:HOOD) is down 20.43%. EMCOR Group (NYSE:EME) is up 27.00% despite a -2.32% first week. These are price returns over different holding periods, so the “since addition” figures are not directly comparable to one another.
The Verdict Lines Up With the Research
The tally: seven of the twelve competitively selected additions over the past year are underwater since joining, and week one was closer to a coin flip than a reliable rally. This analysis excludes spinoff-driven index placements from DuPont, Honeywell and FedEx Freight, which are mechanical rather than competitive selections and would not produce a comparable inclusion effect.
Sell-side research says the same thing. Stephens analyst Melissa Roberts notes that new S&P 500 additions have historically outperformed the benchmark from announcement to inclusion, with the biggest gains the day after announcement. After inclusion they have typically given back some gains and lagged the benchmark over the next three months by about 2%.
What It Means for Reddit
Reddit is joining from a weakened share-price position. The stock is down more than 31% year to date through Thursday’s close and off more than 42% from its September 2025 high. The fundamentals are there. The forward P/E sits at 31 against Q2 EPS of $1.25 versus a $0.97 estimate and quarterly revenue growth of 61.1% year over year, as detailed in Reddit’s Q2 2026 10-Q filing with the SEC. Analyst targets average $215.62.
The forced-buying setup on 16.7 million shares will likely deliver a further pop into effective date. What the record suggests is that by the time Reddit officially joins later this month, most of the trade is already priced in. Long term, the index still tends to head higher, and Reddit’s fundamentals give it a real seat at the table. Short term, history says do not confuse the announcement move with a durable rerating.
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