Reddit Shares Rise 1.24% Amid Google AI Turbulence as $1.57B Volume Ranks 43rd in Market Activity Despite Ongoing Securities Lawsuit

On August 15, 2025, Reddit (RDDT) closed with a 1.24% increase, trading at $114.15 per share, with a daily trading volume of $1.57 billion, ranking 43rd in market activity. The stock has faced significant volatility since early May 2025 amid regulatory and analytical pressures.

A pending securities fraud class action lawsuit alleges Reddit executives misled investors during the October 2024–May 2025 period by failing to disclose material risks related to declining user traffic. The case claims algorithmic changes at Google Search, including AI-driven "zero-click" responses, disproportionately reduced Reddit's traffic and advertising potential. This led to a 4.2% drop in Reddit's share price on May 2 and a further 9.3% decline on May 21 after downgrades from Wells Fargo and Baird analysts. Both firms cited long-term threats from Google's AI advancements to Reddit's core business model.

Recent short interest in Reddit has decreased by 7.23%, suggesting improved investor sentiment despite ongoing litigation. The stock's price-to-earnings ratio of 220.98 remains significantly above industry and market averages, reflecting its speculative valuation profile. Analysts have issued 12 "buy" ratings, 9 "hold" ratings, and 1 "sell" rating over the past 90 days, with projected earnings growth of 94.64% for the coming year.

The strategy of buying the top 500 stocks by daily trading volume and holding them for one day from 2022 to 2025 generated $10,720 in total profit, achieving a cumulative return of 1.08 times the initial investment. This approach leveraged high-volume momentum but experienced fluctuations due to broader market dynamics.