Amazon.com, Inc (NASDAQ: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 (NASDAQ:AAPL) and Alphabet Inc (NASDAQ:GOOG) (NASDAQ: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.
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