Why Amazon's 20-For-1 Split Is 'Much More Important Than A Typical Tech Company Stock Split'

Amazon.com, Inc AMZN on Wednesday announced a stock split for the first time in more than 20 years. Besides the extended time between splits, why is it such a big deal for Amazon in particular?

According to Loup Ventures' Gene Munster, it's because of the size of Amazon's workforce.

"It's much more important than a typical tech company stock split and the reason is that Amazon has 1.3 million employees," Munster said Thursday on CNBC's "Squawk Box."

To put that in perspective, Apple Inc AAPL and Alphabet Inc GOOG GOOGL have around 150,000 employees each.

Related Link: Amazon Announces 20-For-1 Stock Split, Share Buyback: Here Are The Details

Munster's Thesis: The majority of Amazon workers are in logistics and make somewhere between $35,000 and $40,000 per year, Munster said. If Amazon wants to reward employees with stock compensation, one pre-split share would represent around a 10% bonus, which is substantial.

By announcing the 20-For-one stock split, Amazon creates the ability to offer more shares to employees who are deserving.

"When employees own stock, presumably, they're going to work a little bit harder," Munster said. 

Amazon's massive workforce also comes with large wage costs, he said: "Any cost that you can shift from the wages side of the ledger over to the deferred stock, that's a positive."

AMZN Price Action: Amazon has traded as low as $2,671.45 and as high as $3,773.03 over a 52-week period.

The stock was up 3.75% at $2,890 at time of publication.

Photo: courtesy of Amazon.