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Reddit Investors Hit with Class Action Lawsuit Over Misleading Claims
ByAinvest
Saturday, Aug 9, 2025 8:59 pm ET1min read
A class action lawsuit was filed against Reddit, Inc. (RDDT) alleging that the company made false and misleading public statements about its user traffic and advertising revenue during the period of October 29, 2024, to May 20, 2025. The lawsuit claims that Reddit and its senior officers omitted truthful information about the impact of changes in Google Search's algorithm on the company's user traffic. Investors who bought RDDT stock during this period can learn about joining the lawsuit.
A class action lawsuit has been filed against Reddit, Inc. (RDDT) alleging that the company made false and misleading public statements about its user traffic and advertising revenue during the period of October 29, 2024, to May 20, 2025. The lawsuit, brought by shareholders, claims that Reddit and its senior officers omitted truthful information about the impact of changes in Google Search's algorithm on the company's user traffic [1].The complaint, filed by Levi & Korsinsky on June 18, 2025, states that investors purchased RDDT stock at artificially inflated prices during the Class Period. The lawsuit contends that Reddit's CEO and other senior executives repeatedly made false and misleading statements about the impact of Google's algorithm changes on user traffic and advertising revenues. For instance, during an analyst call on February 12, 2025, the CEO reassured investors that the company had effectively adapted to previous algorithm changes, despite evidence suggesting otherwise [1].
The lawsuit further alleges that Reddit failed to disclose that the latest algorithm changes were materially different from prior instances, leading to a significant reduction in user traffic. The company was aware that users were finding answers on Google Search without visiting Reddit, a trend that negatively impacted Reddit's traffic [1].
The lawsuit also references the actions of financial analysts who downgraded Reddit's stock and lowered their price targets in May 2025, citing concerns about the impact of Google's AI capabilities on Reddit's user growth. These events coincide with a series of stock price declines, including a 9.3% drop on May 21, 2025 [1].
Investors who purchased RDDT stock during the Class Period are encouraged to learn about joining the lawsuit. The deadline to ask the Court to appoint a Lead Plaintiff is August 18, 2025. Interested investors can contact the law firms representing the plaintiffs, Pomerantz LLP or the Law Offices of Howard G. Smith, for more information [2][3].
References:
[1] https://www.tipranks.com/news/rddt-lawsuit-alert-class-action-lawsuit-against-reddit-inc
[2] https://www.marketscreener.com/news/pomerantz-law-firm-reminds-investors-with-losses-on-their-investment-in-reddit-inc-of-class-action-ce7c5ed9d08af121
[3] https://www.marketscreener.com/news/reddit-inc-rddt-investors-who-lost-money-have-opportunity-to-lead-securities-fraud-lawsuit-ce7c5edddf89f426
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