Reddit faces securities class action
Analysis based on 14 articles · First reported Jun 20, 2025 · Last updated Jul 20, 2025
The class action lawsuit against Reddit could negatively impact its stock price and investor confidence due to potential financial liabilities and reputational damage. Investors who purchased Reddit securities during the Class Period may be entitled to compensation, affecting the company's financial outlook.
Rosen Law Firm has filed a class action lawsuit against Reddit, alleging that the company made false and misleading statements to investors between October 29, 2024, and May 20, 2025. The lawsuit claims that Reddit failed to disclose that changes in Google Search Console's algorithm and features like AI Overview were significantly reducing traffic to the Reddit website. These algorithm changes were materially different from prior instances of reduced traffic, and Reddit was allegedly aware that the increase in the query term 'Reddit' on search engines was due to users getting answers directly from Google Search Console, not intending to visit Reddit. This 'zero-click search' reality dramatically reduced traffic, which Reddit was unable to overcome in the short term, leading to a lack of reasonable basis for its outlook on user rates and advertising revenues. Investors who purchased Reddit securities during this period are encouraged to join the class action by the August 18, 2025, lead plaintiff deadline.
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