Amazon Higher After HQ2 Announcement

AFTER MONTHS OF speculation and competition, (Nasdaq: AMZN) announced on Tuesday that its second headquarters will be split between Arlington, Virginia, and New York City. Analysts say the new locations will give the company critical access to two of the largest financial and political hubs in the world.

Amazon stock was up 2 percent on Tuesday after the announcement.

Amazon says it plans to invest $5 billion in developing its two new headquarters and plans to hire 25,000 employees in each location. In addition, the company is opening a fulfillment, transportation and supply chain hub in Nashville that will create an additional 5,000 jobs. Amazon will also maintain its original headquarters in Seattle.

Amazon says the new Arlington headquarters will be built in the National Landing area, which includes the Crystal City and Pentagon City areas of Arlington and Potomac Yard in Alexandria. The New York headquarters will be built in Long Island City. Amazon says it will begin hiring employees for the new headquarters in 2019, and the average salary for new employees will be $150,000 per year.

“These two locations will allow us to attract world-class talent that will help us to continue inventing for customers for years to come,” CEO Jeff Bezos says in a statement. “The team did a great job selecting these sites, and we look forward to becoming an even bigger part of these communities.”

Amazon began accepting bids from potential locations about a year ago, but the company narrowed its list of finalists down from 238 cities to 20 locations in January. Three of the 20 finalists were located near the District of Columbia, where Bezos owns the Washington Post.

Wedbush analyst Daniel Ives says Washington was likely carefully chosen in part to help boost Amazon’s chances of landing key government cloud contracts, such as the $10 billion Pentagon JEDI contract expected to be awarded in April.

“Amazon invested significant resources (we estimate roughly $800 million over the last five years) building out its presence in Washington D.C. around senior leadership, R&D development, experienced enterprise sales reps, partners, and further building an AWS ecosystem that has the scale and scope to capitalize on a pending cloud paradigm shift,” Ives says.

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