Private prison stocks are breaking out. Shares in Geo Group and CoreCivic, two of the largest for-profit operators of prisons and immigrant detention centres in the US, have shot up 74 per cent and 55 per cent since Donald Trump’s election victory this month. History suggests Make America Great Again trades do not always do so great. In theory, the two companies stand to benefit greatly if Trump delivers on his promise to crack down on border security and illegal immigration.
They housed 91 per cent of all people held in detention centres that opened under the Trump administration. Despite that, revenue barely budged at the two companies during Trump’s first term. At Geo, the $2.3bn of revenue it pulled in 2020 was just 8 per cent more than what it made in 2016. Net income actually fell during the period. It is a similar story at CoreCivic. Revenue grew just 3 per cent while net income fell from $220mn in 2016 to just $54mn in 2020.