REDDIT ALERT: Bragar Eagel & Squire, P.C. Announces that a Class Action Lawsuit Has Been Filed Against Reddit, Inc. and Encourages Investors to Contact the Firm

/EIN News/ -- NEW YORK, June 18, 2025 (GLOBE NEWSWIRE) -- Bragar Eagel & Squire, P.C., a nationally recognized stockholder rights law firm, announces that a class action lawsuit has been filed against Reddit, Inc. (“Reddit” or the “Company”) (NYSE:RDDT) in the United States District Court for the Northern District of California on behalf of all persons and entities who purchased or otherwise acquired Reddit securities between October 29, 2024 and May 20, 2025, both dates inclusive (the “Class Period”). Investors have until August 18, 2025 to apply to the Court to be appointed as lead plaintiff in the lawsuit.

Click here to participate in the action.

The complaint alleges that the social media website Reddit receives a significant portion of its user traffic from Google Search, and Reddit’s primary source of revenue is generated from advertising to users on its own platform. Throughout the relevant period, Google Search began implementing new Artificial Intelligence (“AI”) capabilities such as AI Overview that could change the nature of search results.

Defendants are alleged to have made false and misleading statements, and failed to disclose, that: (i) changes in Google Search’s algorithm and features like AI Overview were causing users to stop their query on Google Search; (ii) these algorithm changes were materially different than prior instances of reduced traffic to the Reddit website; (iii) Defendants were aware that the increase in the query term “Reddit” on search engines was because users were getting the sought after answer from Google Search without having to go to Reddit, and not because they intended to visit Reddit; (iv) this zero-click search reality was dramatically reducing traffic to Reddit in a manner the Company was unable to overcome in the short term; and (v) Defendants, therefore, lacked a reasonable basis for its outlook on user rates and advertising revenues.

On May 1, 2025, after the market close, Reddit issued an earnings release announcing its first quarter 2024 financial results for the period ending March 31, 2025. The earnings release revealed that Reddit had experienced three consecutive quarters of deceleration in daily active user growth.

On this news, the price of Reddit’s common stock fell $4.96 per share, or 4.2%, from a closing price of $118.79 per share on May 1, 2025, to a closing price of $113.83 per share on May 2, 2025.

Then, on May 19, 2025, Wells Fargo analysts downgraded Reddit’s stock and lowered their price target to $115 per share from a previous $168 per share. Wells Fargo called Google Search’s implementation of new AI features as likely “permanent” disruptions on user traffic for Reddit.

On this news, the price of Reddit’s common stock fell $5.24 per share, or 4.6%, from a closing price of $113.23 per share on May 16, 2025, to a closing price of $107.99 per share on May 19, 2025.

Finally, on May 21, 2025, Baird analysts substantially downgraded Reddit’s stock, reducing the price target to $120 per share from the previous $140 per share. Citing similar concerns as the Wells Fargo analysts, Baird analysts additionally noted the new and disruptive developments in Google Search that had just been presented at the Google I/O developer conference.

On this news, the price of Reddit’s common stock fell $9.79 per share, or 9.3%, from a closing price of $105.64 per share on May 20, 2025, to a closing price of $95.85 per share on May 21, 2025.

If you purchased or otherwise acquired Reddit shares and suffered a loss, are a long-term stockholder, have information, would like to learn more about these claims, or have any questions concerning this announcement or your rights or interests with respect to these matters, please contact Brandon Walker or Marion Passmore by email at investigations@bespc.com, telephone at (212) 355-4648, or by filling out this contact form. There is no cost or obligation to you.

About Bragar Eagel & Squire, P.C.:

Bragar Eagel & Squire, P.C. is a nationally recognized law firm with offices in New York, California, and South Carolina. The firm represents individual and institutional investors in commercial, securities, derivative, and other complex litigation in state and federal courts across the country. For more information about the firm, please visit www.bespc.com. Attorney advertising. Prior results do not guarantee similar outcomes.

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Contact Information:

Bragar Eagel & Squire, P.C.
Brandon Walker, Esq.
Marion Passmore, Esq.
(212) 355-4648
investigations@bespc.com
www.bespc.com