Reddit, Inc. (NYSE: RDDT) Securities Fraud Class Action

LEAD PLAINTIFF DEADLINE IS AUGUST 18, 2025.

If you have suffered losses and would like to discuss your rights, please fill out this form or you may contact Jonathan Naji, Esq. at (484) 270-1453 or via e-mail at info@ktmc.com.

Case Background:
A class action lawsuit was filed on behalf of those who purchased or otherwise acquired Reddit, Inc. (“Reddit”) (NYSE: RDDT) securities between October 29, 2024, and May 20, 2025, inclusive (the “Class Period”).

The Class Period begins on October 29, 2024, when Reddit issued an earnings release announcing its third quarter 2024 financial results for the period ending September 30, 2024 (“3Q24 Earning Release”). The 3Q24 Earning Release reported that Reddit’s daily active unique (“DAUq”) increased 47% year-over-year to 97.2 million and revenue growth of 68% year-over-year to $384.4 million.  That same day, Reddit held a call with analysts to discuss its financial results.  On the call, in response to a question concerning Google’s capabilities impacting Reddit’s user growth, Reddit assured that “we've long had I think a symbiotic relationship with the Google search platform. It's high utility for some of our core users. Those users are going to come to Reddit regardless,” and that Reddit’s “app growth has been stable and reliable. And that's where the vast majority of our revenue is.” 

On May 1, 2025, after the market closed, Reddit issued an earnings release announcing its first quarter 2024 financial results for the period ending March 31, 2025 (“1Q25 Earning Release”). In the 1Q25 Earning Release, Reddit reported that DAUq increased 31% year-over-year to 108.1 million and revenue growth of 61% year-over-year to $392.4 million. The DAUq figures in the 1Q25 Earning Release would mark Reddit’s third consecutive quarter slowdown in daily active user growth, which increased uncertainty around the sustainability of growth.  On the accompanying call with analysts to discuss its financial results, Reddit assured that “We believe we’re in great shape over the medium and longer term,” and “I think the question behind the question is, is there a long-term risk to Reddit here? And in my view, the answer is no.”  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, 20
25.

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. Specifically, the analysts stated traffic to Reddit from Google Search, particularly from logged-out users in the U.S., is likely to decline as result of the changes and that accordingly, the reduction in traffic will ultimately hurt Reddit’s advertising revenue.  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 also noted the new developments in Google Search that had just been presented at the Google I/O developer conference. With this confirmation on permanent disruptions to Reddit’s traffic, Baird analysts accordingly “adjust[ed] estimates for ongoing U.S. user growth headwinds.”  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.

The complaint alleges that, throughout the Class Period, Defendants made false and/or misleading statements and/or failed to disclose that: (1) changes in Google Search’s algorithm and features like AI Overview were causing users to stop their query on Google Search; (2) these algorithm changes were materially different than prior instances of reduced traffic to the Reddit website; (3) 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; (4) this zero-click search reality was dramatically reducing traffic to Reddit in a manner the company was unable to overcome in the short term; (5) Defendants, therefore, lacked a reasonable basis for their outlook on user rates and advertising revenues; and (6) as a result, the company’s public statements were materially false and misleading at all relevant times.

What is a Lead Plaintiff?

A lead plaintiff is a representative party that acts on behalf of other class members in directing the litigation. In order to be appointed lead plaintiff, the Court must determine that the class member’s claim is typical of the claims of other class members, and that the class member will adequately represent the class. Your ability to share in any recovery is not, however, affected by the decision whether or not to serve as a lead plaintiff. Filling out the online form above or communicating with any counsel is not necessary to participate or share in any recovery achieved in this case.  Any member of the purported class may move the court to serve as a lead plaintiff through counsel of his/her choice, or may choose to do nothing and remain an inactive class member.