Billionaire Stanley Druckenmiller Bought This Newly Added S&P 500 Stock That's Up 351% Since Its IPO

When it comes to social media, most people probably think first of Facebook or Instagram -- two flagship properties owned by Meta Platforms. Not too far in the distance behind them, however, is rival Reddit (NYSE: RDDT). Reddit operates a vast network of chat forums where people discuss everything from their hobbies to global news events.

The company's core business model relies on advertising revenue, selling targeted placements to brands that value the platform's engagement. In recent years, Reddit has also started to monetize its enormous library of human conversations through data licensing. This has created a secondary revenue stream that aligns with the artificial intelligence (AI) boom.

The latest quarter's batch of 13F filings shows that Duquesne Family Office, the private firm of legendary investor Stanley Druckenmiller, initiated a position in Reddit during Q2 -- buying 56,550 shares. Given Druckenmiller's ability to spot asymmetric growth opportunities, I was curious about what attracted him to Reddit, and whether the internet darling is a potentially sound investment opportunity right now.

Image source: The Motley Fool.

Analyzing Reddit's performance as a public company

Reddit debuted on the New York Stock Exchange in March 2024. While the company priced its shares at $34, they actually opened closer to $47. In the months that followed, Reddit stock climbed steadily as the company demonstrated accelerating revenue growth and an improved profitability profile.

By September 2025, Reddit reached an all-time high price of roughly $283. Over the last year, however, shares have sold off considerably. As of this writing (Aug. 19), Reddit trades at around $155 per share -- a decline of more than 40% from its high.

So far this year, the stock is down about 32% -- lagging the S&P 500 (SNPINDEX: ^GSPC) by a wide margin. Reddit's underperformance is a reflection of investor concerns about the pace of the company's data-licensing deals and questions around the sustainability of its advertising sales growth given the competitive landscape.

Reddit's AI ambitions are interesting

Reddit possesses one of the richest archives of real human conversation online. This data is highly valuable to AI developers seeking high-quality training data that captures natural language, cultural nuance, and specialized knowledge. Back in 2024, Reddit struck multiyear licensing agreements with OpenAI and Google, granting each company access to the platform's content for model training. It's important to note that recent reports suggest there are new renegotiations ongoing between Reddit and Google, as Reddit has found this relationship cannibalizing some of its organic traffic.

While AI-driven revenue only represents about 5% of Reddit's total quarterly sales, that's a high-margin business line with meaningful room to expand as more AI labs seek licensed rather than scraped data. For an investor like Druckenmiller, Reddit's dual identity as both an advertising platform and an emerging AI data supplier offers a compelling combination of revenue and cash generation supplemented by future optionality.

The investment case for owning Reddit stock

Perhaps the most immediate catalyst for Reddit arrived last week when the company announced it was being added to the S&P 500. Inclusion in the index signals that the company has achieved sufficient scale, liquidity, and financial maturity to place it among the ranks of America's largest public companies.

Exchange-traded funds and mutual funds that track the S&P 500 are now required to hold Reddit stock, inherently creating structural demand that can support the stock price over the long run. More importantly, membership in the large-cap index underscores Reddit's evolution from an online forum into a more sophisticated, durable business capable of sustained growth and profitability.

Druckenmiller's decision to build a position in Reddit appears to have been well timed, capturing both the index-driven inflows and the longer-term potential of a platform deepening its AI relevance while expanding its legacy advertising footprint. Investors who share Druckenmiller's conviction in secular technology trends may consider following him into the stock.

RDDT PE Ratio data by YCharts.

Reddit's pullback throughout this year has left it trading at a more attractive price-to-earnings ratio relative to prior periods. The combination of proven revenue momentum, S&P 500 status, and expanding AI licensing creates an attractive risk-reward profile for those willing to look beyond the stock's near-term volatility.

Adam Spatacco has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Meta Platforms and Reddit. The Motley Fool has a disclosure policy.