Core Viewpoint - A class action lawsuit has been filed against Reddit, Inc. for allegedly misleading investors regarding user growth and advertising revenue, particularly in light of changes to Google's search algorithm that negatively impacted Reddit's traffic [3][4]. Group 1: Class Action Details - The class action represents investors who purchased Reddit securities between October 29, 2024, and May 20, 2025, with a deadline of August 18, 2025, to file a lead plaintiff motion [1]. - The lawsuit claims that Reddit made false statements and failed to disclose material information about the impact of Google's algorithm changes on user traffic [3]. Group 2: Allegations Against Reddit - Key allegations include that changes to Google Search's algorithm, such as the introduction of AI Overview, significantly reduced user click-throughs to Reddit [3]. - It is alleged that the increase in searches for "Reddit" did not indicate genuine user intent to visit the site, as users were finding answers directly on Google [3]. - The lawsuit asserts that these factors led to a significant drop in traffic that Reddit could not quickly offset, undermining its guidance on user growth and advertising revenue [3]. Group 3: Financial Impact - Following the release of Q1 2025 financial results on May 1, 2025, which showed a third consecutive quarter of slowing daily active user growth, Reddit's stock price declined [4]. - Analysts from Wells Fargo downgraded Reddit's stock on May 19, 2025, lowering the price target to $115 due to concerns over Google's AI features causing permanent disruption to user traffic [4]. - Baird analysts also downgraded Reddit's stock on May 21, 2025, cutting the price target to $120, citing ongoing U.S. user growth headwinds, which resulted in a stock decline of over 9% [5].
Reddit, Inc. Investors: Please contact the Portnoy Law Firm to recover your losses; August 18, 2025 Deadline to file Lead Plaintiff Motion