Reddit's 35th-Ranked Volume Plunge Amid Google Search Fraud Allegations

On August 5, 2025, Reddit (RDDT) closed with a 1.32% decline, marking a 28.36% drop in trading volume to $2.15 billion, ranking 35th among U.S. stocks. The move follows a securities fraud lawsuit alleging the company concealed material risks related to algorithmic changes at Google Search. The lawsuit claims Reddit failed to disclose how Google's AI Overview feature and search algorithm updates led to a "zero-click search" phenomenon, where users obtained answers directly in search results without visiting the platform. This allegedly caused traffic declines that undermined the company's user growth and advertising revenue projections.

Plaintiffs argue Reddit executives were aware that increased search queries for "Reddit" reflected users accessing content via Google rather than visiting the site. The lawsuit further contends that the company's public optimism about its business prospects lacked a reasonable basis given these undisclosed challenges. Investors now have until August 18 to join the class action, though no immediate market reaction to the legal filing has been observed. The case highlights ongoing scrutiny of how generative AI tools are reshaping online traffic dynamics for content platforms.

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