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    • Why Tennessee-based CoreCivic Stock Surged After Trump’s Reelection
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    Why Tennessee-based CoreCivic Stock Surged After Trump’s Reelection

    Umito Posted on

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    Shares of Brentwood-based private prison company CoreCivic jumped after the re-election of former President Donald Trump on November 5. The stock climbed further Monday when Trump nominated a former U.S. Immigration and Customs Enforcement official. Tom Homan will oversee border control once he takes office on January 20, 2025.

    Despite a federal investigation into alleged civil rights violations at the CoreCivic-owned Trousdale Turner Correctional Center in Tennessee, the market’s outlook for the company has improved since Election Day.

    Before the election, CoreCivic shares on the New York Stock Exchange were valued at about $13.19, and by November 11, they had jumped 81 percent. That peak was $23.94 per share the day Homan took over as “border czar.”

    Today, stock prices hover between $21.50 and $22, the range they reached after Trump’s victory. This represents an increase of 69% from the pre-election value and 41% over the last six months.

    CoreCivic and Florida-based corrections company Geo Group are the two largest private prison companies in the country. Geo Group shares have also seen a significant increase in value since the presidential election.

    Although it is not yet clear what role CoreCivic and its facilities will play over the next four years, the Trump administration promises to speed up expulsions of illegal immigrants could result in profit gains for the private prison industry, which houses inmates.

    Here’s what you need to know about CoreCivic’s business model, its current financial situation, and how it could benefit from rising illegal immigrant detentions.

    What is the connection between CoreCivic and American immigration?

    CoreCivic owns, operates and leases correctional facilities across the United States. Its partners include federal, state and local governments, but its largest partner is U.S. Immigration and Customs Enforcement, or ICE.

    ICE is a federal agency under the Department of Homeland Security responsible for enforcing immigration laws both near the borders and throughout the country. This can result in operations such as arrests of immigrants with ties to terrorists earlier this year or searches in poultry factories in 2018 And 2019 which detained hundreds of immigrants in Tennessee and Mississippi.

    Every year, ICE arrests hundreds of thousands of immigrants. While some are being held in detention centers owned and operated by ICE, most are in private facilities like those owned by CoreCivic.

    During the third quarter of fiscal 2024, from July to September, CoreCivic’s revenue from ICE was $139.7 million.

    What does CoreCivic expect from the Trump administration?

    Two days after the presidential election, on November 7, CoreCivic Chairman and CEO Damon Hininger hosted the company’s quarterly earnings conference call to discuss the company’s financial performance and potential future impact. re-election of Trump.

    In short, Hininger said the company’s future is bright and it is preparing for a potentially massive increase in demand for detention beds nationwide.

    “It feels like with this election this year, we’re heading into an era that we really haven’t seen, maybe only once or twice in the history of the company,” Hininger said . “The private sector value proposition for both our state partners and our federal partners will not only be strong today, but even stronger over the next two years.

    This year, the number of detention beds used by ICE ranged from about 39,000 in early March to just over 37,000 according to the most recent data released in September. Talk of increased detentions began on the eve of the election, as candidates for the White House and Congress made immigration and border security a central issue.

    Hininger said the number he heard over the summer was 50,000, but now that “seems to be a floor” since Republicans will control the White House, House and Senate.

    “We have about 18,000 vacant beds in our system, and that includes our available beds in Dilley, Texas,” Hininger said. “So we are taking proactive steps and working on a plan to activate and make available all the beds we have in the company.

    The company maintains that its lobbying policy is “not to advocate for or against legislation that serves as a basis for detaining a person or determines the length of that detention.”

    What is CoreCivic doing in Tennessee?

    In addition to being headquartered in Tennessee, CoreCivic operates four prisons in the state: Trousdale Turner Correctional Center, South Central Correctional Center, Hardeman County Correctional Facility, and West Tennessee Detention Center .

    Earlier this year, the The US Department of Justice has opened a civil rights investigation in conditions at Trousdale Turner, including problems with understaffing, drug overdoses and sexual misconduct.

    In August, Tennessee fined CoreCivic $15 million for failed contracts, but this week the Tennessee Department of Corrections requested a $6.8 million increase in its annual budget to honor its contract with CoreCivic.

    How much money does CoreCivic make?

    The company has annual sales of nearly $2 billion.

    According to Hininger, a little more than half of that comes from federal partners like ICE and the U.S. Marshals Service.

    Although ICE’s revenue declined slightly in the third quarter, Hininger said that was due to the closure of the South Texas Family Residential Center in Dilley, Texas. Additionally, the number of ICE detainees in CoreCivic facilities increased by 5% in October, Hininger said.

    “While election year uncertainty may have slowed some purchases, the underlying need for more beds is there,” he said. “CoreCivic is ready to help solve problems for federal, state and local government agencies to help them meet their various challenges in the short and long term.

    Hadley Hitson covers business news for The Tennessean. She can be reached at [email protected]. To support his work, subscribe to The Tennessean.

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