Core Viewpoint - A class action lawsuit has been filed against Reddit, Inc. for alleged misleading statements regarding user traffic and advertising revenue, particularly in relation to changes in Google Search's algorithm and AI features [1][3][5]. Group 1: Lawsuit Details - The lawsuit covers individuals who purchased Reddit securities between October 29, 2024, and May 20, 2025, with a deadline of August 18, 2025, to apply as lead plaintiff [1]. - The complaint alleges that Reddit's user traffic was significantly impacted by changes in Google Search, which began implementing new AI capabilities that altered search results [2][3]. Group 2: Financial Impact - Reddit reported three consecutive quarters of deceleration in daily active user growth in its earnings release on May 1, 2025, leading to a stock price drop of $4.96, or 4.2%, from $118.79 to $113.83 per share [4]. - Following a downgrade by Wells Fargo on May 19, 2025, Reddit's stock fell by $5.24, or 4.6%, from $113.23 to $107.99 per share, with analysts citing permanent disruptions from Google Search's new AI features [5]. - On May 21, 2025, Baird analysts downgraded Reddit's stock again, reducing the price target to $120 from $140, resulting in a further decline of $9.79, or 9.3%, from $105.64 to $95.85 per share [6][7].

Core Viewpoint - A class action lawsuit has been filed against Reddit, Inc. due to alleged misleading statements regarding user traffic and advertising revenue, particularly in relation to changes in Google Search's algorithm and AI features [1][3]. Group 1: Lawsuit Details - The lawsuit is on behalf of individuals and entities that purchased Reddit securities between October 29, 2024, and May 20, 2025, with a deadline of August 18, 2025, for lead plaintiff applications [1]. - The complaint claims that Reddit's user traffic was significantly impacted by changes in Google Search, which began implementing new AI capabilities that altered search results [2]. Group 2: Allegations Against Defendants - Defendants are accused of failing to disclose that changes in Google Search's algorithm were causing users to stop their queries on Google, leading to reduced traffic to Reddit [3]. - It is alleged that the increase in searches for "Reddit" was due to users finding answers directly on Google, rather than intending to visit Reddit, resulting in a "zero-click search" scenario that negatively affected traffic [3]. Group 3: Financial Impact - On May 1, 2025, Reddit reported three consecutive quarters of deceleration in daily active user growth, causing its stock price to drop by $4.96, or 4.2%, from $118.79 to $113.83 per share [4]. - Following a downgrade by Wells Fargo on May 19, 2025, which cited permanent disruptions from Google Search's new AI features, Reddit's stock fell by $5.24, or 4.6%, from $113.23 to $107.99 per share [5]. - On May 21, 2025, Baird analysts further downgraded Reddit's stock, leading to a decline of $9.79, or 9.3%, from $105.64 to $95.85 per share [6][7].