by BLACK ENTERPRISE Editors
Despite a series of immigration blitzes and high-profile raids, the government didn’t use as much detention space as investors expected.
The GEO Group and CoreCivic, the largest companies that provide detention space for Immigration and Customs Enforcement, seemed likely to reap a windfall after their stocks soared in the weeks leading up to last year’s inauguration of President Donald Trump.
But while Trump’s deportation machine had explosive growth, its reach hasn’t lived up to Wall Street expectations. Stock prices for both companies slumped. Despite a series of immigration blitzes and high-profile raids, the government didn’t use as much detention space as investors expected.
Detention industry experts and other observers believe all that could change this year, with the immigration system—and privately run holding facilities—expected to grow even larger.
“Once Trump was elected, there was a rush and belief that all this was going to occur at the snap of a finger,” said Joe Gomes, an equity analyst for Noble Capital Markets, an investment bank. “It’s just taken a little longer than many investors thought to see these numbers really jump up,” he told The Marshall Project.
On his first day in office, Trump reversed an executive order from former President Joe Biden to curb the use of private companies to operate federal prisons for the Justice Department—though they continued to be used for immigration detention. Contractors like GEO Group and its primary competitor, CoreCivic, welcomed the news. Days later, the first piece of legislation Trump signed into law, the Laken Riley Act, made it easier to detain undocumented immigrants accused of low-level crimes.
“This is a unique moment in our company’s history, and we believe we are well-positioned to scale up our diversified segments—in secure housing, transportation, electronic monitoring—to meet the changing needs of this new administration, and to continue to enhance value for our shareholders,” George Zoley, the Greek-born founder of GEO Group, said during a quarterly earnings call in February.
“Investors got over their skis,” said Gomes, the analyst.
“Never in our 42-year company history have we had so much activity and demand for our services as we are seeing right now,” CoreCivic CEO Damon Hininger, a former correctional officer himself, said during an earnings call in May.
Zoley said GEO Group subsidiary BI Incorporated could scale up its monitoring contract to serve millions of people for ICE.
The Trump administration is also still ramping up. And investors and observers expect the system to keep growing this year.
“As they expand their infrastructure—that includes officers, buildings, fleets, buses, planes, technology—then that’s when we are probably going to see more people, more numbers captured into all of this,” said Bianca Tylek, executive director of Worth Rises, a national human rights nonprofit that monitors the prison industry.
The White House and ICE see publicly traded private prison companies like GEO Group and CoreCivic as “allies and assets” to their ongoing efforts to deport many more people, said David Bier, director of immigration studies at the Cato Institute, a libertarian think tank.
“The contractors are the consequence of the policy choice made by this administration,” he said.
And as a libertarian, he said he views illegal immigration as the consequence of a broken immigration system. He described the Trump administration’s immigration policy as “indiscriminate mass deportation.”
“If you go down the list, it’s hard to find a right that they haven’t violated in the Constitution,” he said. “I find it incredibly troubling that they are getting away with it so far.”
“There aren’t enough criminal immigrants in the United States that they can catch to fill those facilities, so this is all about caging a bunch of peaceful people who aren’t bothering anyone,” Bier said.
He expects the Trump administration to surpass its detention bed goal.
Gomes, the analyst, said that as ICE brings more people into work, it could improve the financial results of GEO Group and CoreCivic.
“As those employees come on, you will see the number of detentions increase,” he said.
This story was produced by The Marshall Project and reviewed and distributed by Stacker.
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Source: Black Enterprise
