Amazon AMZN has unexpectedly dropped its plans of building a second headquarter in the Queens borough of New York City. The decision comes following a month of city council grilling and objections raised by the locals, politicians and activists regarding its HQ2 plans in the city.
Notably, Amazon's opposition to unionization and its willingness to work with U.S. Immigration and Customs Enforcement were primary reasons behind protests.
Moreover, some politicians were also against the $3 billion incentive or subsidy that the state had promised to grant the company for creating 25,000 jobs and investing around $2.5 billion in the city. Economic Impact of the Move
Many are of the view that Amazon's latest decision does not bode well for New York as the promise of 25,000 jobs fizzles out with the company discarding the plan.
Further, the city forgoes the huge tax revenues that the company would have generated with its Ney York City head quarter.
Further, many expected Amazon to negotiate a settlement with the state which would have aided its long-term goals and driven growth.
Consequently, both the company and state have lost economic value and growth opportunities.
Amazon.com, Inc. Price and Consensus
Amazon.com, Inc. Price and Consensus | Amazon.com, Inc. Quote
However, Amazon remains confident of its decision of abandoning plans in New York despite massive concerns of incurring loss.
The company is of the opinion that such strong opposition from politicians and state officials is likely to act as hindrance in building a strong relationship with the state that is absolutely crucial for a project of this scale.
Moreover, scrapping off New York plans seems to be painless as it was not binding for the company to acquire or lease land for the project.
Reportedly, Amazon is currently not looking for a replacement location. Further, the company has decided to shift the technology jobs meant for New York project to its other offices across the United States and Canada.
We believe Amazon is likely to continue riding on its strong focus toward adding efficiency to business and expansion strategies. The company has plans to expand its existing New York offices in Brooklyn, Manhattan, and Staten Island.
Further, it will continue with its development plans of headquarter in Arlington, VA and a new Operations Center of Excellence in downtown Nashville, TN.
Zacks Rank & Stocks to Consider
Currently, Amazon carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the broader technology sector are Alphabet GOOGL , TripAdvisor TRIP and Expedia Group EXPE . All the three stocks carry a Zacks Rank #2 (Buy). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here .
Long-term earnings growth rate for Alphabet, TripAdvisor and Expedia is pegged at 17.51%, 12% and 13.4%, respectively.
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