Chief Executive Officer Of Zoom Video Communications Trades $25M In Company Stock

Eric Yuan, Chief Executive Officer at Zoom Video Communications ZM, made a large buy and sell of company shares on October 13, according to a new SEC filing.

What Happened: A Form 4 filing from the U.S. Securities and Exchange Commission states that Eric Yuan exercised options to purchase 96,154 Zoom Video Communications shares for $0 on October 13. They then sold their shares on the same day in the open market. They sold at prices ranging from $257.77 to $267.68 to raise a total of $25,456,896 from the stock sale.

Yuan still owns a total of 23,608,087 shares of Zoom Video Communications in the form of derivative securities.

Zoom Video Communications shares are trading down 0.64% at $265.3 at the time of this writing on Friday morning.

Why Insider Transactions Are Important

Insider transactions shouldn't be used primarily to make an investing decision, however, they can be an important factor for an investor to consider.

In legal terms, an "insider" refers to any shareholder who owns at least 10% of a company. This can include executives in the c-suite and large hedge funds. These insiders are required to let the public know of their transactions via a Form 4 filing, which must be filed within two business days of the transaction.

When a company insider makes a new purchase, that is an indication that they expect the stock to rise.

Insider sells, on the other hand, can be made for a variety of reasons, and may not necessarily mean that the seller thinks the stock will go down.

Transaction Codes To Focus On

Investors prefer focusing on transactions that take place in the open market, indicated in Table I of the Form 4 filing. A P in Box 3 indicates a purchase, while S indicates a sale. Transaction code C indicates the conversion of an option, and transaction code A indicates the insider may have been forced to sell shares in order to receive compensation that had been promised upon being hired by the company.

Check Out The Full List Of Zoom Video Communications's Insider Trades.