Came here to say this. He started with 0 shares of class A stock, and ends with 0 shares of class A stock.
What he did do is convert $23m worth of class B stock into class A stock, and sell it.
Adding up all the class B stock & options he holds at the end of the transaction (Table II, column 9), he still holds ~50M shares (worth ~$165 a pop as of this writing).
The current headline, "Zoom CEO sold all of his common shares", is technically correct but highly misleading – but's it's still interesting to see what a founder on a rocketship is doing to diversify a little, even in the particulars of the conversion/disclosure & how it's (mis-)interpreted by peanut galleries everywhere.
I guess. I don't know how much of that $10b is readily liquid. If we really want to look at it in percentage terms it seems like that number is the one to compare to.
Frankly it seems reasonable to me to sell off some shares to "lock in" some of the gains; I'm not sure that shows a lack of confidence going forward.
Besides, there's a lot of reasons to sell shares. Maybe he's buying a house.
I see an X against 10% Owner. which means of the market cap of 46 billion Eric Yuan should own at the least $4.6 billion worth of shares. the current sale is noise (0.005 % of his shares. )
That's some artifact of the form or the reporting requirements.
Per their Mar 20 2020 10k [1], Eric holds
> As of January 31, 2020, our founder, President and Chief
Executive Officer, Eric S. Yuan, together with his affiliates, held approximately 16.5% of our outstanding capital stock
This is a ludicrous headline. The CEO converted a tiny percentage of his class B shares to class A in order to sell them. There is nothing noteworthy here.
Zoom is currently valued at around 60 times its annual recurring revenues. Their share price has tripled since January.
The whole crisis was a fantastic opportunity for them, but it also means that it is going to become critical for microsoft, google and all to offer a competitive product sooner rather than later, considering how many companies are going remote.
The competitive advantage of zoom is real, but how long can it last if that becomes a priority for these players. I am not saying that zoom is going to become worthless any time soon but that it's going to be very high to maintain that kind of multiple for a long period of time, especially after covid times.
Zooms competitive advantage will disappear when this is over. It’s a service that’s been around for what seems like ever but no one wanted to use it when there were better alternatives. Suddenly have 30 people in a tiled interface was an advantage, but not something anyone ever wanted.
How do you interpret this? The first row he acquired 70,143 at a cost of $0, and the amount he owns after that is 70,143? So he didn't have any before the 11th? Then he sells them all for $LOTS, and then acquires another 70,143 at a cost of $0, and sells them all again? Is this just him cashing out a bonus paid in class A when his actual holdings (assuming he held any before the 11th) are in some other class?
If you scroll down in the sheet, you can see that he also disposed of the same number of class B shares. He is simply converting a small number of his class B shares (not publicly traded, 10X voting rights) to class A so he can sell them.
Yes. From the looks of it, the CEO is just selling a previously-negotiated award on the date of acquisition. He has been awarded, then immediately sells roughly 70,000 shares a day over two days, along with exercising some options.
Table II shows that he still (indirectly) owns around 24 million shares of Class B stock and 130k options.
The filing notes that these trades are following a 10b5-1 plan, which is basically exactly that: you set up trades in advance so that you can make them without falling afoul of the insider trading rules.
It looks like this is part of a normal "exercise and sell all your options as soon as you receive them" plan. Notice that on 5/11, he goes from 70,143 shares to 0 over the course of the day. And then again on 5/12, he goes from 70,143 shares to 0 over the course of the day. It wouldn't have gone back up to 70,143 the next day if he'd just sold his lump sum of founder shares.
Maybe he wanted a boat. Or a moat. Or maybe he wanted to buy some distressed assets. Or thought now is the right time to setup a trust for his loved ones.
Point being, people sell for so many reasons but they only buy for one reason: they think it will make them money.
It’s interesting when insiders buy big. Selling has too much noise.
It should be somewhere in the SEC filings, but a company like Morningstar (and probably many brokerages) should have this information as part of a standard stock research report.
I do not see why it looks bad. As others said, he sold a tiny percentage of holdings, which is a standard setup for many executives (with sale notifications filed with SEC months in advance)
That’s class A shares, which are publicly traded. He also has many class B shared which are not publicly traded but have 10X voting power. This was just selling a bit of the company to get some available cash.
Could be something ominous (though that seems like it would be blatant insider trading). Or, perhaps the CEO thinks that the stock has peaked for the near future. Given Zoom's popularity right now, that seems like a real possibility.
Perhaps this isn’t the best thing for the company, but personally, I can’t imagine having even ten million dollars in stocks (what seems to be the value of the stocks sold per my calculation) and wanting to just keep them there, especially in a single stock. Sell it all, and donate all but three or four million. That’s more enough money to live the rest of your life in a very comfortable way. What’s the point of having more? It’s just a rat race to show off to the people around you.
That said, he’s already a billionaire, so it’s not like this is actually a significant change in value for him.
The point of owning more stock (or wealth in general) is often not simply "living comfortably" or any sort of pure consumption. If that's your framing, lots of large-scale economic behavior will remain unimaginable.
Similarly, it's not "just a rat race to show off", either – though there's some of that, as a psychological motive among the very-rich. That's still not sufficient to describe the logic of what's actually going on.
Rather, ownership of such highly-valuable assets is about the control it offers, over how those assets are used. In this case, the primary asset is "Zoom Video Communications Inc", and all its intangible & tangible assets, including experienced staff, intellectual property, brands, relationships with locked-in users bases, etc.
If Eric Yuan wants to guarantee he retains the largest influence over what Zoom does in the future – because he has pride of creation, because he believes it's a valuable service for society, because he finds it an intellectually stimulating way to live life & exercise his unique talents, moreso than just being a 'consumer', he must retain the lion's share of equity ownership. Such ownership is how our society tracks control over big synergistic flotillas of resources.
The theoretical amount of lifetime-consumption that ownership could instead represent, if sold, is a tangential detail to the full significance of the holding. And, a true plan to "sell it all" would likely cause much of the value to evaporate – as some of the perceived trading value of the circulating shares is premised on the founder's continued immersion in the business.
To a limited extent, the ability to liquidate "a little", & thus get the lifetime-consumption-security that you've portrayed as the whole "point", is relevant – but not because it completes Yuan's ambition, ensuring a lifetime of 'comfort', but because it could allow even more focus on the bigger social enterprise involved.
Yet, if no one cared about "this sort of power" – the creative possibilities of large-scale enterprises under the control of those most engaged – we wouldn't have these computers, this internet, this HN.
And Bill Gates is likely going to save (if he hasn't already) many more lives with his post-ambitious-building wealth, than if he'd cashed out as soon as he had "three or four million… to live the rest of [his] life in a very comfortable way", and donated the rest at that early moment.
+1 to this. There was a study IIRC that insider buys in open market were the only reliable signal from insider buys and sells -- especially if the insiders had been officers (directors/executives) for a while.
[1] https://www.gurufocus.com/news/1135874/zoom-video-communicat...