Reddit Inc (NYSE:RDDT) shares jumped more than 16% on Friday after S&P Dow Jones Indices said the company will join the S&P 500 index next week. The inclusion is expected to trigger mandatory buying from institutional funds that track the benchmark. The index milestone follows a strong second-quarter report from Reddit, which posted revenue of about $805 million, up 61% from a year earlier, and diluted earnings per share of $1.25, topping Wall Street estimates.
The company also issued third-quarter revenue guidance of $860 million to $870 million, above analyst expectations. Advertising remained Reddit's biggest growth driver, with ad revenue rising about 64% year-over-year to $762 million. The company credited improvements to its automated ad stack for the gains, and it maintained a gross margin above 91% while net income more than doubled from the prior year.
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