By Michael Teich
Amazon's blog post announcing it will pull the plug on its New York City headquarters is nothing but a bluff to bring politicians back to the negotiating table, said D.A. Davidson Analyst Tom Forte.
"Absolutely Amazon's bluffing," Forte told Cheddar Friday.
"What they're trying to do is basically get the support of the governor, support of the mayor. They have a loud local minority that's against Amazon coming to New York. When they announced that they were going with Northern Virginia, Tennessee, and New York City for their second HQ, it was an official press release. When they announced that they're reconsidering New York, it was a blog post."
Forte believes that Amazon put too much time and effort into selecting New York to reverse course now, and that the Big Apple offers too many strategic benefits in the tech giant's favor.
"When you think about New York, it checks a lot of boxes for Amazon as far as why they wanted to have a headquarters here."
"It's the largest population in the U.S., so it should have the largest population of talent for Amazon," he added. "And then there's local advantages unique to New York both in the media business and the advertising business, and those are two very important areas for Amazon as far as future growth of the company, so it's hard for me to believe they're just going to throw in the towel."
Forte has a "Buy" rating and $2,450 price target on Amazon ($AMZN) shares, and continues to be bullish, given the company's ability to generate profits from its highest growing businesses.
"The overlying story for Amazon is we call it Profit Incorporated. Their cloud computing, their advertising, their third-party retail, their fastest-growing businesses are their highest margin businesses, and that's why you're seeing much better than expected earnings per share from Amazon."
For full interview click here.