Cramer: Stock Splits Don’t Matter Right? Wrong!

(Having trouble with the video? Click here!)

Typically pros will tell you that stock splits don't matter. But Cramer thinks in this case it matters a lot.

"CEO Marc Benioff's decision to issue a four-for-one stock split for is an inspired and correct decision, one that I believe will help this $175 stock immeasurably. That's right, I think it will matter, maybe matter much more than most realize," said Cramer on Friday's broadcast.

Skeptics may argue that stock splits are cosmetic – that they don't affect market cap. And of course, they're right. But Cramer believes that cosmetics can change psychology – and in turn that can move the needle.

"Right now these high dollar stocks are like high-wire acts for individual investors. They are needlessly dangerous when the companies themselves may be excellent."

That's particularly true in the case of Salesforece, which Cramer said at $175 is treacherous to own.

"Not because of the company's execution, it's doing fabulously well," Cramer explained, "but because of how poorly the security trades. It is too thin and too unwieldy. Plus, it is footballed around by the hedge fund community endlessly."

Because of those and other factors, when Salesforce moves, it tends to make big moves, swinging either sharply higher or significantly lower in dollar terms.

H-Gall | Vetta | Getty Images

"If the stock jumps 7% the day after it reports earnings, no one wants to pay up $12. You feel like a chump immediately. Nor do you want to be in a stock where you could lose $12 in a blink of an eye," Cramer said.

However, after the 4 for 1 split the $175 stock will trade around $43.

That's where the psychology comes in - a similar 7% move would be $2.20 – and that seems much more palatable.

Read More from Mad Money with Jim Cramer
Cramer Concerned, Says Buyers Beware
Cramer's Quest for Growth - Hot Stock
Don't Fear These CEO Departures

In turn, that should create a more stable investment, one which will attract retail investors who tend to buy and hold and shake out the hot money which tends to day trade.

"The split provides a reason to no longer fear an unpredictable stock of what has become a very predictable company," said Cramer. "It doesn't deserve to swing as it does, not with this kind of earnings consistency."

Again, "CEO Marc Benioff's decision to issue a four-for-one stock split for is an inspired and correct decision," Cramer said.

Call Cramer: 1-800-743-CNBC

Questions for Cramer?

Questions, comments, suggestions for the "Mad Money" website?