Reddit wants out of a proposed investor class action accusing it of downplaying the impact that Google's artificial intelligence-generated search results have had on the forum website's traffic and ad revenues, arguing it has always been up-front with the public about the potential competition from Google.

In its motion to dismiss filed Friday, Reddit said it has provided its investors with "real-time information" regarding the potential negative impact of Google AI on Reddit's business. Reddit said it "proactively" disclosed the risks associated with Google AI and algorithmic updates before and during the class period, which begins in October 2024.

"Defendants' statements did not downplay or deny risk in any way, and certainly cannot be found misleading in the context of Reddit's overall disclosures and market awareness of Google update risk," Reddit said.

According to plaintiff Anthony Joseph Tamraz Jr., much of Reddit's user traffic comes from people seeking answers to questions using Google, but in 2024, Google introduced a feature that uses generative AI to provide concise search results, giving users an answer without needing to click through to another website.

The investor alleged Reddit failed to disclose that Google's "AI Overview" and its search algorithm were causing users to stop their query on Google; that the "zero-click search reality" was significantly reducing traffic to Reddit in a way the platform was not able to overcome in the short term; and that the defendants lacked a reasonable basis for their outlook on user rates and ad revenues.

But Reddit said Friday it explicitly said during an earnings call that "some [changes] help, some hurt," and that it "sees volatility from Google all the time."

Additionally, Reddit said the suit does not plead scienter since it does not show "motive or opportunity" to commit fraud.

"Plaintiff identifies no specific facts supportive of its theory that Defendants' 'outlook on user rates and advertising revenues' was misleading," the company said. "Plaintiff pleads no motive, no unusual stock trades, and no specific facts suggesting that Reddit's executives feared Google updates would 'dramatically reduce traffic to Reddit.'"

According to the complaint, Reddit issued an earnings release for the third quarter of 2024 in October, reporting that its "daily active unique," which measures unique users visiting the website or using the app in a 24-hour period, had increased 47% year-over-year to 97.2 million. The company also reported a revenue growth of 68% year-over-year to $384.4 million, according to the suit.

On May 1, 2025, Reddit issued an earnings release for its first quarter, reporting its daily active unique increased 31% year-over-year to 108.1 million and revenue grew 61% year-over-year to $392.4 million, the complaint states.

The daily active unique figures in May 2025 marked Reddit's third consecutive quarter slowdown in daily active user growth, which increased uncertainty around the sustainability of growth, the suit stated.

During an earnings call in May, CEO Steven Huffman acknowledged "short-term bumps," but reassured investors that such impacts would not affect the company's long-term strategy or opportunities, according to the suit.

The following day, the price of Reddit's stock fell from $118.79 per share to $113.83 per share, or about a 4.2% decline, the suit states.

But Reddit said Friday it performed in line with or ahead of its own forecasts and market expectations, and that its revenues and users grew at the end of 2024 and the beginning of 2025, negating the suit's allegations.

The purported corrective disclosures and stock drops cited in the suit, including the May 2025 analyst call, do not establish loss causation, Reddit said.

After the earnings report, Reddit's stock price initially rose, it said. Then, following the May 1 earnings call, the market reacted to new information about April daily active unique growth and forward-looking statements like Reddit's warning to stockholders of "'bumpy' DAUq for the year ahead," Reddit said.

"A corrective disclosure 'must "relate back to the misrepresentation and not to some other negative information about the company,"'" Reddit said. "It is not sufficient that the market reacts to new information that does not reveal a fraud."

Representatives of the parties did not immediately respond to requests for comment on Tuesday.

Tamraz is represented by Scott A. Edelsberg of Edelsberg Law PA and Andrew J. Shamis of Shamis & Gentile PA.

Reddit is represented by Jonathan K. Youngwood, Laura K. Lin and Stephen P. Blake of Simpson Thacher & Bartlett LLP.

The case is Anthony Joseph Tamraz Jr. v. Reddit Inc. et al., case number 3:25-cv-05144, in the U.S. District Court for the Northern District of California.