ZM Stock Up 10% on Tuesday as Zoom CEO Eric Yuan Transfers $6B Worth of Shares

UTC by John Kiguru · 3 min read
ZM Stock Up 10% on Tuesday as Zoom CEO Eric Yuan Transfers $6B Worth of Shares
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After a slump during the weekend, Zoom (ZM) stock is back to winning ways.

A transfer of 18 million shares on Friday by Zoom Video Communications Inc (NASDAQ: ZM) founder Eric Yuan is set to raise a few browses. At least until the recipients of the shares are disclosed. The shares at closing time on Friday were valued at $6 billion. According to the Wall Street Journal, the shares are from two trusts for which Mr. Yuan and his wife are co-trustees. And were recorded as two gifts of nearly 9 million shares each. The shares are roughly 40% of his total shares. Investors will be keen to know who will control the shares and what their intentions might be. Before the transfer, Yuan was the highest shareholder with 15% to his name and 40% of the company’s voting power.

Although the company is yet to disclose who received the shares, its spokeswoman has noted that “the distributions were made in accordance with the terms of Eric Yuan and his wife’s trusts, and are consistent with the Yuan’s typical estate planning practices.”

The 51-year-old started his company in 2011 before going public in 2019. Its stock had its best year in 2020 growing by more than 400%, seeing Yuan’s worth nearly triple in a year. Its 2020 growth was attributed to the popularity of video calls during the lockdowns experienced around the world. Now as countries begin to open up, the company has been adamant that it will continue growing. Working from home will continue to be a trend and demand for video calling is a reality stated the founder. Reporting on 2020 earnings which topped $2.65, the founder added that he expects a 41% growth this year.

Zoom Shares Price Pops

After a slump during the weekend, Zoom (NASDAQ: ZM) stock is back to winning ways. On Tuesday, Zoom stocks began rallying and have gained around 10%. Why? Though the transfer puts a question in the company’s long-term agenda, there has been one positive. Though the transfer has been straightforward, the state of the shares has somewhat changed. Yuan’s shares were Class B status which earned him 10 votes in each shareholder voting. The shares transferred have however turned ordinary in which one share represents one vote.

This means that the founder has given up considerable voting power with the transfer. On a whole, this is positive for the rest of its shareholders who get a better grip on the future of the company. Shares will continue to be stable until there is any concern over the recipient of the shares.

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