Reddit to join S&P 500, but history warns gains may fade after initial pop

Reddit will join the S&P 500 later this month, prompting a premarket stock rise of about 11% due to expected index fund buying. However, historical data shows that many recent S&P 500 additions experience an initial price jump followed by declines or underperformance. Reddit's fundamentals are strong with solid earnings and revenue growth, but the initial boost from index inclusion may already be priced in. Investors should be cautious about expecting sustained gains solely from the inclusion event.