Stock Prices for Private Prison Firms Surge After Trump Elected President
by Derek Gilna
Donald Trump was declared the winner of the 2016 presidential election early on the morning of November 9, 2016. Before that day was over, the stock prices for private prison companies GEO Group (GEO) and CoreCivic (formerly known as Corrections Corporation of America) had significantly surged in value.
Opponents to prison privatization correctly pointed out that President-elect Trump had made no secret of his intention to start deporting “two or three million criminal aliens,” which apparently led to Wall Street’s reaction the day after he was elected, since over 60% of immigrant detainees are held in privately-operated facilities. Additionally, during his campaign Trump had made a comment in favor of private prisons, saying they seemed to “work a lot better.”
Given the inherent volatility of the stock market, it remains to be seen if these newly-inflated share values will be sustained – though the stock prices for both GEO and CoreCivic currently remain much higher than they were pre-election.
CoreCivic’s stock jumped from $14.19 per share to $20.31 per share the day after the election, and as of late March was trading at around $32 per share. GEO Group’s stock went from $23.88 per share on November 8 to $28.96 per share on November 9, 2016, and was trading at approximately $46 per share when this issue of PLN went to press.
To much fanfare, outgoing President Obama’s Justice Department announced in August 2016 that it would begin phasing out for-profit facilities used by the federal Bureau of Prisons. [See: PLN, Sept. 2016, p.28]. That led to a steep decline in the stock prices for GEO Group and CoreCivic, and consequently a major drop in their market capitalization.
However, the Department of Justice’s decision to step back from private prisons on the federal level was reversed by the Trump administration in February 2017. Both GEO Group and CoreCivic had donated $250,000 to Trump’s inauguration fund, while GEO made a $225,000 donation to a pro-Trump political action committee during the election through a subsidiary, GEO Corrections Holding, Inc.
Apparently, those modest political contributions have paid off handsomely. GEO Group trades on the New York Stock Exchange under the symbol GEO, while CoreCivic trades under CXW.
Sources: www.qz.com, www.huffingtonpost.com, www.newyorker.com