1. Reddit faces a class action lawsuit for securities fraud. 2. The lawsuit centers on misleading statements about user growth. 3. Analysts downgraded Reddit due to concerns over user traffic decline. 4. Stock prices fell significantly amid negative news and analyst downgrades. 5. Deadline for lead plaintiff participation is August 18, 2025.
Recent downgrades and traffic concerns suggest negative long-term outlook. Historical examples show significant price drops during similar circumstances.
The ongoing lawsuit and analyst actions indicate a likelihood of investor losses, impacting stock sentiment.
Ongoing legal issues may suppress RDDT's price over extended periods, similar to other tech firms facing lawsuits.
The Law Offices of Frank R. Cruz reminds investors of the upcoming August 18, 2025 deadline to participate as a lead plaintiff in the securities fraud class action lawsuit filed on behalf of investors who acquired Reddit, Inc. ("Reddit" or the "Company") (NYSE: RDDT) securities between October 29, 2024 and May 20, 2025, inclusive (the "Class Period").
IF YOU ARE AN INVESTOR WHO LOST MONEY ON REDDIT, INC. (RDDT), CLICK HERE TO PARTICIPATE IN THE SECURITIES FRAUD LAWSUIT.
What Happened?
On May 1, 2025, after market hours, Reddit released its first quarter 2025 financial results, marking a third consecutive quarter with slowdown in daily active user growth. On this news, Reddit's stock price fell $4.96, or 4.2%, to close at $113.83 per share on May 2, 2025, thereby injuring investors.
Then, on May 19, 2025, Wells Fargo analysts downgraded Reddit's stock, stating that Google's AI features would likely cause "permanent" disruptions to user traffic for Reddit, and that traffic to Reddit from Google Search would continue to decline and ultimately hurt Reddit's advertising revenue. On this news, Reddit's stock price fell $5.24, or 4.6%, to close at $107.99 per share on May 19, 2025.
Then, on May 21, 2025, Baird analysts downgraded Reddit's stock, citing similar concerns as Wells Fargo. On this news, Reddit's stock price fell $9.79, or 9.3%, to close at $95.85 per share on May 21, 2025, thereby injuring investors further.
What Is The Lawsuit About?
The complaint filed in this class action alleges that throughout the Class Period, Defendants made materially false and/or misleading statements, as well as failed to disclose material adverse facts about the Company's business, operations, and prospects. Specifically, Defendants failed to disclose to investors 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, Defendants' positive statements about the Company's business, operations, and prospects were materially misleading and/or lacked a reasonable basis at all relevant times.
If you purchased or otherwise acquired Reddit securities between October 29, 2024 and May 20, 2025, the deadline to seek appointment as the lead plaintiff in the securities fraud class action is August 18, 2025.
Contact Us To Participate or Learn More:
If you wish to learn more about this class action, or if you have any questions concerning this announcement or your rights or interests with respect to the pending class action lawsuit, please contact us:
Frank R. Cruz
The Law Offices of Frank R. Cruz,
2121 Avenue of the Stars, Suite 800,
Century City, California 90067
Email us at: info@frankcruzlaw.com
Call us at: 310-914-5007
Visit our website at www.frankcruzlaw.com
Follow us for updates on Twitter: twitter.com/FRC_LAW
If you inquire by email, please include your mailing address, telephone number, and number of shares purchased.
To be a member of the class action you need not take any action at this time; you may retain counsel of your choice or take no action and remain an absent member of the class action. This press release may be considered Attorney Advertising in some jurisdictions under the applicable law and ethical rules.
View source version on businesswire.com: https://www.businesswire.com/news/home/20250815266397/en/
The Law Offices of Frank R. Cruz, Los Angeles
Frank R. Cruz, 310-914-5007
fcruz@frankcruzlaw.com
www.frankcruzlaw.com