It’s always tough to hear about people losing their jobs. Yet it often does big things for the company. Zoom Video Communications (NASDAQ:ZM) demonstrated this today as it announced a set of layoff plans, joining a growing string of tech stocks that have already done likewise. If Zoom’s layoff plans sound unusual compared to those we’ve already heard, it’s because they are. Zoom is poised to lay off about 15% of its total workforce, roughly 1,300 people all told. Normally the layoffs in the tech sector so far have come in around 5% of the total.
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Zoom, however, is cutting much, much harder. Eric Yuan, Zoom’s CEO, noted that the world—and the market for Zoom—already changed with the pandemic, then into the post-pandemic, and now into a possible global recession. However, while Yuan kept his job, he will be taking a pay cut. Not only will Yuan give up his bonus for Fiscal Year 2023, but he’s also cutting his pay by 98%. Meanwhile, the executive team will also lose their bonuses and take a 20% pay cut.
Given that Yuan cleared just over $1.11 million back in Fiscal Year 2022, however, the cut will likely represent little hardship. It was noteworthy, though, that Yuan blamed himself for the need to lay off workers, noting that Zoom grew three-fold in the space of 24 months thanks to the massive ramp-up in demand posed by the pandemic and the sudden need for remote working tools. Nevertheless, the growth of competitors and the decline of the market prompted the need for Zoom to cut back.
Meanwhile, the analyst consensus on ZM stock is a Hold with an upside potential of 1.89% thanks to its average share price target of $84.30.
