One of the biggest questions of 2018 for Amazon.com, Inc. (Nasdaq: AMZN) and its investors is where the company will choose to locate its second headquarters. Last week, Amazon narrowed down its list of possible locations to just 20 cities, but GBH Insights head of technology research Daniel Ives says Atlanta is at the top of the list.
Amazon’s list of 20 cities includes places like New York, Los Angeles and Chicago, but Ives says Amazon’s priorities in choosing the right location likely rule out these major cities. According to Ives, Amazon is likely looking for a corporate presence on the East Coast, a city with a local engineering and/or university environment, a transportation hub with long-term growth potential, a location with a strong technology and pharmaceutical presence and a city with favorable tax and business laws.
“In a nutshell, based on our analysis of key factors driving this major decision for Amazon, we believe Atlanta is currently the leader of the pack with Raleigh close behind and Washington, D.C. representing a major wild card and also heavily in the running,” Ives says.
Atlanta and the other cities on Amazon’s short list have a lot riding on the decision. Ives estimates about $5 billion in investments and 50,000 jobs will be pumped into the local economy.
Ives says investors could also potentially glean some useful information from Amazon’scity of choice.
“We also believe that investors, city/state officials, technologists, and many throughout the consumer and enterprise landscape are watching this headquarters situation closely as it could help read the tea leaves around Amazon’s next strategic move as it looks to further expand its consumer empire,” Ives says.
Regardless of where Amazon is headed next, Citi analyst Mark May says the company’s 30 percent revenue growth, expanding margins and reasonable valuation (20 times 2019 projected free cash flow) provide plenty of upside for investors in the long term.
“If taking a long-term perspective, then AMZN should arguably be the top-ranked company and stock in the Internet sector,” May says.
Citi has…
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