Is Reddit Stock Set to Join the S&P 500 Index in 2025?

With meme stocks jumping back into the spotlight, shares of meme-stock hub Reddit (RDDT) are also grabbing investor attention - and analysts at Morgan Stanley are taking notice, too. With RDDT stock now up 42% since its mid-November lows, the brokerage firm today upgraded the stock to “Overweight” with a price target of $200, and predicted that inclusion in the benchmark S&P 500 Index ($SPX) could soon be on the horizon.

"We have been wrong on the sidelines with RDDT year-to-date,” wrote the firm in a note to clients. “But as we look ahead to '25, we don't think we have fully missed this scaling platform that is rapidly shipping its pipeline of engagement and advertising initiatives."

Reddit, which also revealed its artificial intelligence (AI)-powered Reddit Answers search feature today, could also help support monetization on the platform, says Morgan Stanley, with the firm adding: "Given the strong fundamentals and GAAP profitability we would argue this increases the chance that RDDT could be included in S&P 500 index."

RDDT stock has reversed early gains to trade slightly lower this morning. The company has shown remarkable growth since its IPO in March 2024, and is now valued at approximately $28.57 billion. Compared to broad-market benchmarks like the SPDR S&P 500 ETF Trust (SPY) and Invesco QQQ Trust (QQQ), which have six-month returns of 13.7% and 13.5% respectively, Reddit's six-month return is significantly higher at 194.2%. 

With 17 analysts in coverage, the consensus rating on RDDT stock is a “Moderate Buy.” At around $161 per share, the stock trades at a steep premium to its average price target of $119.70. Morgan Stanley’s newly revised target of $200 represents a new Street-high target for the shares, and implies expected upside of 24.2% from current levels.