
Zoom CEO sold all of his common shares - xoxoy
https://investors.zoom.us/static-files/192d304e-10ec-4585-8233-698d7e1e73ad
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dkyc
This is complete nonsense. He sold about $23m worth of stock [1], while he
owned about 22% of stock at the time of IPO, worth roughly ~$10b in total.

[1] [https://www.gurufocus.com/news/1135874/zoom-video-
communicat...](https://www.gurufocus.com/news/1135874/zoom-video-
communications-inc-zm-ceo-eric-s-yuan-sold-231-million-of-shares)

~~~
rodw
Is there any way to edit the HN post title to be more accurate?

"Zoom CEO sold $24m worth of stock" is still a pretty compelling headline.

~~~
skwirl
Just flag it. I really don't think your proposed headline would have gotten
any traction here and would have immediately dropped off the front page.

~~~
rodw
> I really don't think your proposed headline would have gotten any traction
> here

That's OK with me.

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kbal11
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.

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IMTDb
You cant really blame him.

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.

~~~
themagician
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.

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BukhariH
ZM has two classes of Common Stock - Class A & Class B.

Looks like Eric exited his Class A shares but he still holds over $4B+ USD in
Class B.

source: [https://docoh.com/company/1773298/yuan-eric-s/insider-
owners...](https://docoh.com/company/1773298/yuan-eric-s/insider-ownership-
history)

~~~
fra
He didn't exit class A, he didn't hold it in the first place. Instead, he
converted a small percentage of his class B into class A, and sold it.

~~~
BukhariH
Converting from Class B -> Class A opens a position in Class A.

Selling those Class A shares is still exiting a position in Class A.

But you're definitely right about the context!

He merely converted some Class B shares (non-publicly traded with 10X voting
rights) to Class A (publicly traded) in order to sell them.

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mcintyre1994
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?

~~~
kbal11
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.

~~~
mcintyre1994
Gotcha, that makes sense - thanks!

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pubkraal
Is this not an action that commonly is prepared months in advance?

~~~
mywittyname
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.

This is a nothingburger.

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nostrademons
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.

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encoderer
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.

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Irishsteve
I’m not able to work our from this if it’s actually all his common stock. Any
idea where to get that.

~~~
rantwasp
you cannot work it out from this form. it tells you what he’s selling and when
it was acquired.

it does look bad though

~~~
gbear605
From the form, he has many many more class B shares that he didn’t sell. This
was only a small proportion - maybe he’s buying a yacht?

~~~
rantwasp
oh yes. the yacht for social distancing. forgot about that

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organsnyder
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.

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gbear605
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.

~~~
gojomo
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.

~~~
gbear605
Personally, I can’t imagine someone caring about that at all. Especially when
you compare it to the possibility of saving hundreds of thousands of lives
([https://www.givewell.org/giving101/Your-dollar-goes-
further-...](https://www.givewell.org/giving101/Your-dollar-goes-further-
overseas)).

But yes, some people clearly care about this sort of power above all else.

~~~
gojomo
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.

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duxup
Sales can happen for any number of reasons.

Let me know when a CEO buys...

~~~
afrozenator
+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.

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tutnyce
Post title is false. Form shows that all of his remaining shares (>100x the
amount sold) are Class B common shares, which has 10x voting rights.

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afrozenator
No, this just seems to be selling two options.

Sec Form 4 - "C — Conversion of derivative security"

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peapicker
I think Table II seems to show he has a Trust which own another 18million
shares?

