Following a series of anti-Amazon protests, the e-commerce giant has canceled plans to build a second headquarters in New York City. That’s going to lead to a lot of interesting changes for investors, both in Amazon’s own stock price and the local New York real estate. Few anticipated that the headquarters would meet such volatile opposition, and it’s only the latest in a few major blows that the company has felt.
Amazon had been publicly searching for a second headquarters location for some time. Many cities were interested, as Amazon promised to bring along thousands of jobs with it. In a bid to improve upon its current economy, New York offered Amazon substantial economic incentives that totaled nearly $3 billion, and made New York an attractive choice.
Yet when Amazon decided to move into New York, it found itself opposed by a number of factions within the state and local infrastructure. New Yorkers pushed back against the idea of subsidizing a business to move to New York, in addition to concerns about the loss of New York’s cultural identity and the continuously eroding affordability of the area.
With many expensive businesses already in New York, there are concerns that the region is becoming too expensive for most people to live and work in. If this is true, bringing in additional jobs wouldn’t help: it would only increase the number of people commuting into New York, in addition to making real estate within New York substantially more expensive.
While New York may have been fast to refuse Amazon’s advances, there are many other states that are interested in the some 25,000 jobs that the company is offering to bring in. New Jersey has also requested consideration, as an area that is close to where they were already intending to build.
However, Amazon has not announced plans to continue looking for a new headquarters at this time. Instead, they have planned to expand their existing locations in Virginia and Nashville. This will likely bring additional jobs into those areas, and may have a boosting effect on the local economies.
Amazon may not have expected to be turned away from New York, but the animosity towards the retailer is growing. In recent days, it’s been highly publicized that Amazon is paying $0 taxes on $11.2 billion in profits. Yet, that may also not be the true story: the true story might be more damaging for the company.
Stories about Amazon not paying its fair share in taxes have circulated for years, causing resentment among the very users who often make purchases through it. However, much of this lies in the fact that many companies are able to offset their earnings by things like depreciation—indirect expenses. The truth is less that Amazon is not paying for its profits and more that Amazon isn’t profiting.
A substantial portion of Amazon’s business comes from undercutting other retailers and making up the income in volume. While driving out the rest of the competition, Amazon is losing money. However, that’s not to say it isn’t a solid company in other ways: it currently makes up a significant amount of eCommerce market share on its own.
In additional news, Jeff Bezos, Amazon’s CEO, has been repeatedly hitting the news for controversial personal issues. While this isn’t necessarily indicative of corporate fitness, it is calling into question many things about Amazon’s overall stability. Jeff Bezos has been criticized in the past for his wealth, and the animosity currently being held towards Amazon is part of the growing dislike and distrust over multi-billionaires in the United States.
Amazon is still a solid company with far-reaching impact. While Amazon’s retail sector may not be making a significant profit, its AWS web services are. That being said, the growing distaste for both Amazon and its CEO may have a continued impact on the company. With the public backlash regarding Amazon’s tax situation, repeated issues with overworked labor, and the CEO’s own activities, Amazon is currently in a volatile situation.
Regards,
Ethan Warrick
Editor
Wealth Authority
