### Private Prisons Set for Major Boost Under Trump Administration

The impending Trump administration could spell substantial growth for private prison companies in the U.S., if the president-elect adheres to his hardline stance on illegal immigration. CoreCivic and Geo Group, the two leading private prison operators in the country, stand to benefit significantly as both firms have existing contracts with the U.S. Immigration and Customs Enforcement (ICE) to house detained, undocumented migrants. Following Trump's election victory, stock prices for these companies soared, reflecting investor optimism about increased profits under tougher immigration policies.

CoreCivic's stock surged from $13.50 a share on November 5 to $22 a share, while Geo Group's shares jumped from $15 to $23.75. According to Noble Capital Markets analyst Joe Gomes, this spike indicates that investors are banking on a substantial increase in business opportunities for both firms under the new administration.

Geo Group executives, during their third-quarter earnings call, expressed their anticipation of stricter border security measures from the incoming administration and declared their readiness to support ICE's future needs with additional resources. CoreCivic executives echoed similar sentiments, believing that the election outcome will drive higher demand for their detention services.

During Trump's first term from 2017 to 2021, immigration detention in the U.S. reached unprecedented levels. A report from the American Civil Liberties Union (ACLU) indicates that in 2019, ICE detained an average of over 50,000 people daily, at times exceeding 56,000 - around 50% more than peak levels under the Obama administration. By January 2020, 81% of ICE detainees were held in privately managed facilities.

Looking forward, the Trump administration promises a substantial policy shift at the U.S.-Mexico border, including the largest deportation operation in American history, which could bolster business for CoreCivic and Geo Group even further. ICE accounted for 30% of each company's revenue for the first nine months of 2024.

Both companies have stated they possess excess capacity to handle larger detainee populations. CoreCivic is already preparing to activate additional capacity, which may involve reconfiguring facilities to manage increased intake areas. Analysts like Brian Violino of Wedbush Securities suggest that there's room for higher occupancy, but the scale of expansion will depend on requests from the Trump administration for more beds.

Geo Group also administers the Intensive Supervision Appearance Program (ISAP) for ICE, using wearable monitoring technology as an alternative to detention. With a finite number of beds, an increase in detained individuals could lead to a greater reliance on such alternative programs. Geo Group's executives affirmed their capability to scale up their monitoring services to accommodate several million participants if required.

The extent to which ICE can expand its contracts with these private prison giants depends heavily on Congressional funding. While Republicans have secured a Senate majority, the control of the House of Representatives remains undecided. According to Violino, a Republican sweep would facilitate Trump's efforts to secure necessary funding for his immigration operations.