Zoom Video Stock Gains on Aggressive Cost Cuts
Zoom Video Communications (ZM:US) announced yesterday that it plans to slash its global workforce by roughly 15%, affecting 1,300 workers. Moreover, CEO Eric Yuan will reduce his own salary by 98% while also foregoing his 2023 corporate bonus. In addition, members of the executive leadership team will cut their base salaries by 20% for the coming fiscal year while also forfeiting their FY23 corporate bonuses.
“We did not take a single departure lightly – our leadership carefully examined and made decisions based on critical priorities for long-term growth, and also looked for functions that have become overly complex or duplicative. Some teams will also be adjusting their structures to allow us to better invest in the opportunities ahead,” Yuan wrote in a blog post.
Zoom stock witnessed a rapid fall from its 2021 highs as the company still struggles to cope with the post-pandemic environment. Shares dropped about 80% from the October 2020 high to hit the lowest levels since December 2019.
Zoom is one of the companies that simply grew too quickly, similar to Peloton, and is now feeling consequences. On a more positive note, these steps will help it become a leaner company that can focus on its high-margin businesses.
The stock was very popular for trading in 2021 given the high volatility, however, very few Congress and Senate members did trade ZM shares in recent months. Around 13 months ago, Congresswoman Marie Newman sold some Zoom shares, presumably at a loss given that she was buying them just 6 months ago at a much higher price.
Elsewhere, Congressman Ro Khanna was trading Zoom stock, mostly in the first half of 2022. His last trade includes the sale of Zoom stock on August 1, when it closed at $105.39 per share.
