As the outcome of Tuesday’s presidential election began pointing toward a Biden-Harris administration, private prison companies took a financial hit. Over a few days, CoreCivic and GEO Group, the two largest private prison companies in the United States, saw their stock prices drop substantially. Both companies had benefited from the Trump administration’s hard-line immigration policies.
In just a few days, though, investors seem to have grown concerned about the future of the private prison industry under a Biden presidency. From November 3 to November 6, CoreCivic’s price fell 20.1 percent. The GEO Group’s stock value also took a bludgeoning, suffering a 13.4 percent drop over that short period. Comparing both companies current stock price with the early months of the Trump administration, their newfound stock troubles are even starker. In February 2017, CoreCivic’s stock hit $35.03. Its November 6 closing price of $6.00 marks an 82 percent drop. Its competitor, GEO Group, went from a stock price of $34.12 in April 2017 to $8.45 on Friday, a 75 percent fall.
Even before this week’s presidential election, the private prison industry’s ties to ICE had already been strained because of the efforts of California activists. In that state, activists successfully pushed Governor Gavin Newsom to sign Assembly Bill 32 which curtails the ability of state and local governments from contracting with private prison companies. CoreCivic recently told its investors that AB 32 “would have a significant impact on our results of operations and cash flows.”
For both companies, the Biden-Harris campaign’s promise to “end for-profit detention centers” suggests a difficult four years ahead. Both companies rely heavily on federal government revenue. In their latest annual filings with the Securities and Exchange Commission, CoreCivic reported that 51 percent of its revenue comes from the federal government, with 29 percent coming from ICE alone. For the GEO Group, the federal government represents 53 of its annual revenue, with ICE accounting for 22 percent.
The tension between private prison companies and President-Elect Biden is not new. Back in 2016, during his closing months as vice president, the Obama administration announced that the Justice Department would begin ending its relationship with private prison companies. Months later a Department of Homeland Security advisory group recommended that the agency that oversees ICE do the same. Neither actually happened because the Trump administration rolled back both plans.
The stock price hits that CoreCivic and GEO Group suffered this week likely reflects a fear that, this time, immigrants’ rights advocates are likely to have a more receptive ear in the White House. Whether that alters the federal government’s intimate relationship with the private prison industry remains to be seen. The Obama administration, after all, regularly imprisoned hundreds of thousands of migrants annually.