Prison Stocks Surge Following Trump’s Election and Border Appointment
The recent election of Donald Trump has sparked a notable rise in the stock market for private prison companies, with shares in GEO Group and CoreCivic experiencing significant gains. This surge continued after the announcement of Tom Homan, a former immigration enforcement official under Trump, as the new “border czar.” During the Republican National Convention, Homan stated, “I got a message to the millions of illegal aliens that Joe Biden’s released in our country. You better start packing now.”
Trump’s presidency is known for its impact on the private prison sector, having previously rejuvenated the industry upon his 2016 election. At that time, CNBC reported a research note calling Trump’s victory a “game changer” for the stocks. With Trump’s renewed focus on immigration enforcement, investors are showing confidence in the profitability of these corporations.
GEO Group and CoreCivic stand out as key beneficiaries in the industry. According to its latest annual report, GEO Group relies on U.S. Immigration and Customs Enforcement (ICE) contracts for 43 percent of its revenue. Similarly, CoreCivic derives 30 percent of its revenue from ICE. George Zoley, Executive Chairman of GEO Group, remarked, “The GEO Group was built for this unique moment in our . . . country’s history and the opportunities that it will bring.”
The potential expansion of deportation efforts could further benefit GEO Group and CoreCivic’s transportation subsidiaries. These companies are poised to secure more government contracts to transport individuals within the U.S. immigration system. On an earnings call, GEO Group’s CEO noted, “We believe we have the capabilities to expand the provision of these services to assist ICE in moving several hundreds of thousands of additional individuals if needed.”
Trump’s broader law enforcement agenda could also boost the fortunes of private prison companies. His administration’s platform promises increased penalties for crimes and a crackdown on criminal activities. Although the Department of Justice (DOJ) currently cannot contract directly with private firms for criminal detention, this might change under Trump’s leadership.
The pattern of reversing previous administrations’ policies is evident in the DOJ’s history with for-profit prison contracts. In 2016, under President Obama, a memo directed the Bureau of Prisons to end contracts with private entities. Trump’s administration reversed this, only for Biden to issue an executive order not to renew such contracts. Trump’s forthcoming administration is expected to dismantle these orders.
Beyond incarceration, private prison companies are also likely to benefit from supervising undocumented individuals in the community. GEO Group’s BI Incorporated currently handles ICE contracts for the Intensive Supervision and Appearance Program, involving technologies like GPS monitoring. GEO Group plans to expand this program to accommodate millions.
While CoreCivic lacks a current contract for these services, changes are possible as GEO’s deal approaches its expiration in 2025. The current climate signals a potential uptick for the private prison industry, intertwined with immigration detention and government outsourcing of incarceration facilities.
