Reddit, Inc. (NYSE:RDDT) shares are under pressure today after a one-two punch — Friday’s blowout jobs report rattled high-multiple growth names across the board, while the stock was also passed over for S&P 500 inclusion, disappointing investors who had been anticipating the move.
The Pressure Points
Friday’s jobs report showed 172,000 payrolls added in May — more than double the 80,000 consensus estimate — pushing the 10-year yield above 4.5% and leaving little room for the Federal Reserve to cut rates anytime soon. That’s bad news for high-multiple growth stocks like Reddit, whose valuations are heavily dependent on the expectation of lower rates ahead.
The S&P 500 exclusion added to the pain. Many retail investors on Stocktwits had been speculating Reddit would finally make the cut in Friday’s rebalance — when that didn’t happen, shares dropped in after-hours trading. Index inclusion would have forced passive funds to automatically buy the stock, providing a meaningful and sustained demand boost.
The dual hit comes at a sensitive time for the stock. Reddit has now fallen 28% this year despite strong revenue growth, with softer logged-in user growth continuing to weigh on investor sentiment.
