On Wednesday, shares of private prison giant Corrections Corporation of America (CXW - Free Report) are skyrocketing, up almost 50% in afternoon trading—at one point, the stock was up nearly 60%--thanks to Donald Trump’s stunning presidential victory. Other industry rivals saw a huge boost as well today, with The Geo Group Inc. (GEO - Free Report) currently up over 21%.
One can presume these companies and their investors are banking on enforced “law and order” and an increase in privatizing criminal justice under a Trump presidency. Many of these operators lost huge chunks of value back in August, when the U.S. Department of Justice said it would end contracts with them to house federal inmates, citing safety and inefficiency concerns.
Trump is on record about his support for private prisons, telling MSNBC’s Chris Matthews in June that “I do think we can do a lot of privatizations and private prison. It seems to work a lot better.” And according to Quartz, the for-profit prison industry is set to cash in on Trump’s praise. The GEO Group is “one of the few publicy traded companies to give significant contributions to Super PACs supporting Trump,” as well as other Republicans during this election cycle.
It’s also important to note that both Geo and Corrections Corp. have contracts with U.S. Immigration and Customs Enforcement (ICE). If Trump makes good on his campaign hallmark of deporting millions of immigrants in the country illegally, both companies have the potential to make a lot of money. According to a report by the Department of Homeland Security, undocumented immigrants were held by ICE for roughly 33.5 days on average in 2013 at a cost of $118.88 per day per bed. Of its total revenues in 2014, ICE made up 24% of that number.
For more information on how the markets digested to Trump’s win, read: Here’s How Wall Street Reacted to Donald Trump’s Victory
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