Connect with us


Amazon backs out of HQ2 in New York, but analysts aren’t too worried



Amazon’s decision to cancel a major office expansion into New York is a stunning about-face for the tech giant, but the change of plans is unlikely to have any serious impact on the company’s $230 billion business engine, say analysts.

“This is a blip and a minor bump in the road,” Anthony Chukumba, research analyst at Loop Capital Markets, told Business Insider on Thursday, hours after Amazon announced its surprise decision not to move forward with building a headquarters in Long Island City, Queens,

“Obviously, I’m sure Amazon has put considerable time and attention into the selection of New York, but long term, I don’t think this will hurt the company at all,” Chukumba said.

Amazon, which dominates the online commerce and the cloud computing market, chose to build a headquarters in New York City because of its substantial population and workforce. However, Amazon already has a presence in New York, with 5,000 employees there.

“If Amazon had zero presence in New York City, they would lose out a ton,” Simeon Siegel, senior equity analyst at Instinet, told Business Insider. “I don’t believe this decision suggests they will not have a presence in New York.”

Analysts believe the decision will not change the near or long term outlook on Amazon.

The real action for Amazon is near DC, not New York

And although Amazon may not be able to add 25,000 jobs to New York, as the original plan called for, it can now focus on hiring more talent in Virginia and Tennessee.

Amazon said on Thursday that it will fo forward with plans to continue building a headquarters in Crystal City, Virginia, as well as another office in Nashville.

By building a headquarters in northern Virginia near Washington, DC, Amazon is likely working to boost its presence in federal circles and snag a $10 billion cloud contract with the Pentagon called the Joint Enterprise Defense Infrastructure contract, Daniel Ives, managing director of equity research at Wedbush Securities, said.

“They’ve doubled down on government and moving to Crystal City in the shadows of the Pentagon,” Ives, managing director of equity research at Wedbush Securities, told Business Insider. “That’s strategically the bigger headquarters move that investors are paying attention to rather than [New York].”

Read more:Amazon and Microsoft are fighting for a $10 billion Pentagon contract — and HQ2 in Virginia could be Jeff Bezos’ boss move

Overall, analysts don’t expect this decision to change Amazon’s business strategy, nor will it have major effects on its stock in the long term. If anything, they believe New York loses out more than Amazon does, and in the future, it could prompt other businesses to think twice before they expand to New York.

“The business strategy is already in place,” Mark Hamrick, senior economic analyst at, told Business Insider. “It may have to forgo some opportunity from not having been able to do what it wanted to do in New York, but it doesn’t affect its earnings prospects or ability to drive revenue.”

Continue Reading
Advertisement Find your dream job