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Class action lawsuits

Reddit Sued for Securities Fraud Over Misrepresented Impact of Google's AI Technology

Strategic Insights

— 1 min read

Reddit, Inc. and certain senior executives have been named in a lawsuit alleging potential violations of the federal securities laws. The complaint asserts claims under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 on behalf of investors who purchased Reddit securities. The lawsuit claims that Reddit misrepresented and downplayed the impact of Google's use of Artificial Intelligence (AI) technology in search results, which allegedly dented Reddit's user growth by making Google's AI search results a more convenient alternative for users seeking answers.

Key Takeaways:

  • The lawsuit alleges that Reddit misrepresented and downplayed the impact of Google's AI technology on user growth, which led to a decline in Reddit's stock price. Specifically, the stock price declined $4.96 per share on May 1, 2025, and $9.79 per share on May 21, 2025.
  • The complaint asserts claims under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 on behalf of investors who purchased Reddit securities.
  • The lawsuit is pending in the U.S. District Court for the Northern District of California and is captioned Tamraz, Jr. v. Reddit, Inc., at al., No. 25-cv-05144.
  • The law firm Bleichmar Fonti & Auld LLP is representing the plaintiffs in the case, citing BFA's reputation as a leading international law firm in securities class actions and shareholder litigation.
  • Notable successes of BFA include recovering over $900 million in value from Tesla, Inc.'s Board of Directors, as well as $420 million from Teva Pharmaceutical Ind. Ltd.

Statistics:

  • The price of Reddit stock declined by $4.96 per share on May 1, 2025, or over 4%, from $118.79 per share to $113.83 per share.
  • The price of Reddit stock fell by $9.79 per share on May 21, 2025, or over 9%, from $105.64 per share to $95.85 per share.
  • The complaint alleges that Google's AI technology dented Reddit's user growth, making Google's AI search results a more convenient alternative for users seeking answers.

Sources:

  • Globe NewsWire, July 20, 2025.
  • Bleichmar Fonti & Auld LLP, "Tamraz, Jr. v. Reddit, Inc."

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