TradingKey – Reddit (RDDT) is set to reach a major milestone since going public.

S&P Dow Jones Indices announced on August 13 that Reddit will be officially added to the S&P 500 Index before the US market opens on August 18, replacing AvalonBay Communities, which is currently being acquired by Equity Residential.

Following the announcement, Reddit’s stock price rose 12.45% in extended trading on Thursday, reflecting a quite positive market reaction to this index adjustment.

Source: Google Finance

For Reddit, joining the S&P 500 not only means gaining greater visibility in capital markets, but may also bring a wave of incremental demand from index funds. Because a large number of passive funds benchmark against the S&P 500, these funds…