The Trump administration could be a boon for business for private prison companies in the US if the president-elect keeps his promise to crack down on illegal immigration.
CoreCivic and Geo Group, the two largest private prison operators in the US, both contract with US Immigration and Customs Enforcement (ICE) to house detained, undocumented immigrants. Their shares surged on Wednesday after Trump's election victory, with investors betting that the companies would see profits boosted by a tightening of the immigration administration.
CoreCivic, which closed at $13.50 per share on November 5, is trading at $22 per share, while Jio Group, which closed at $15 per share on Tuesday, is currently trading at $23.75 .
“Obviously, investors believe the opportunities for both of these companies are going to increase significantly under the Trump administration,” Noble Capital Markets analyst Joe Gomes told CBS MoneyWatch.
Jio Group executives acknowledged in the company's third-quarter earnings call Thursday that they expect the incoming administration to implement stricter border security policies and that the company will “provide additional resources to help ICE meet future needs.” Ready to do.”
CoreCivic officials also said they believed the election result would increase demand for its services.
ICE is the biggest customer
According to the ACLU, during Trump's first term, from 2017-2021, immigration detention expanded at record levels. reportIn 2019, ICE detained an average of more than 50,000 people every day. According to the report, at times the number exceeded 56,000 – nearly 50% more than the peak level during the Obama administration. During his first term in office, Trump expanded the federal government's use of private prison companies to detain immigrants.
According to the ACLU report, as of January 2020, 81% of people detained in ICE custody across the US were held in facilities owned or managed by private prison corporations.
In his second term, President-elect Trump has promised a sea change in policy on the US-Mexico border compared to his predecessor. It also includes a promise to take care largest deportation campaign In American history, that could bring a lot more business for CoreCivic and Jio Group.
For the first nine months of 2024, ICE was to account for 30% of each company's revenue.
Both Geo Group and CoreCivic said they currently have excess capacity to accommodate a larger population of detainees. CoreCivic officials noted that they are taking steps to prepare to activate additional capacity to meet ICE's needs. He said this could include reconfiguring facilities to accommodate a larger intake area.
“There is room to increase occupancy from a capacity standpoint, and both companies are expecting the Trump administration to ask for more beds. The question is how much, and we don't know right now,” said Wedbush Securities analyst Brian Violino. CBS Moneywatch.
Supervision
GEO Group also provides monitoring services for ICE under its Intensive Supervised Presence Program (ISAP), a monitoring program using wearable technology that serves as an alternative to detention.
“If there is a limited number of beds and a large number of people are detained, which Trump is discussing in his plans, the use of this alternative to detention could increase,” Violaino said.
Jio Group officials said they have the necessary technology and staffing resources to expand the contract to several million more participants if necessary.
funding from congress
The extent to which ICE expands its contracts with the two largest private prison companies depends on how large an increase in funding Congress authorizes. While Republicans won the Senate majority in Tuesday's election, it remains to be seen which party will regain control US House of Representatives,
“This is a big part of the story, and if it's a Republican sweep, it will be easy for Trump to get money from Congress to support this operation,” Violaino said.