ICE enforcement controversy becomes a "poison"! US private prison stocks plummet, Q4 performance may struggle to drive a stock rebound

Under the boost of Trump’s victory in the U.S. presidential election, the stock prices of the two largest private prison operators in the United States once soared. Now, they are facing a sluggish stock performance. The stocks of GEO Group (GEO.US) and CoreCivic (CXW.US) have both fallen significantly from their record highs and are set to record their largest weekly decline since at least November last year.

These two companies had hoped to benefit from the Trump administration’s promise to detain millions of illegal immigrants. The expectation was supported by hundreds of billions of dollars in funding allocated to the prison industry through the Republican tax and spending bill, which kept their stock prices buoyant until summer last year. However, the reality has not fully met these expectations. Despite frequent high-profile law enforcement actions, the Department of Homeland Security has not met its detention targets for illegal immigrants.

Noble Capital Markets analyst Joe Gomez said, “Although the ‘Big and Beautiful Act’ passed last year provided record funding, the increase in detainee numbers has been slower than many initially expected.” He added that people had anticipated a rapid surge in detainee numbers “in the blink of an eye.”

CoreCivic is scheduled to release its Q4 earnings after the market closes on February 11, while GEO Group will report its Q4 results the following day. Based on derivatives market conditions and increasing uncertainty about federal funding prospects, investors expect these two stocks to experience at least 7% volatility. Additionally, a significant decline in the national crime rate has cast a shadow over the entire prison industry outlook.

Meanwhile, public perception of government law enforcement actions is also creating pressure. Previously, Immigration and Customs Enforcement (ICE) officers fatally shot an American citizen for the second time during an operation in Minneapolis, sparking widespread condemnation of the agency’s law enforcement activities and threats of increased oversight or budget cuts in Congress. Trump’s “border czar” Tom Homan hinted that the operation in Minnesota would be scaled back, and another operation in Maine was abruptly terminated.

GEO Group has contracts with ICE to provide location tracking and detention services for undocumented immigrants, with approximately 60% of its estimated $2.4 billion annual revenue in 2024 coming from the U.S. government. Similarly, nearly half of CoreCivic’s nearly $2 billion revenue also derives from the U.S. government.

Raji Sharma, a stock analyst at Texas Capital Bank, said, “That’s the nature of their business. Every time ICE makes headlines, private prisons come into focus.” He pointed out that both companies face significant “headline risk.”

In their last earnings report, both companies were punished by the market for lowering their profit targets for 2025—despite CoreCivic attributing the downward revision to startup costs related to new ICE contracts. At that time, the CEO stated that as prison occupancy rates increased, he expected a rebound in 2026. GEO Group aimed to break the pattern of stock declines following each earnings release over the past three years—even though the company secured its largest-ever new business within a single year.

Sharma noted that part of the issue is that ICE has been concentrating resources on detention, at the expense of GEO Group’s location tracking and electronic monitoring services, which CoreCivic does not offer.

After legislation passed last July allocating $45 billion over four years to expand U.S. detention capacity, both companies initially expected a significant increase in contract volume. The Trump administration planned to raise immigrant detention capacity to at least 100,000 beds to achieve the goal of deporting 1 million people annually. Reports indicate that when Trump took office last year, about 40,000 people were detained by ICE. As of early this month, that total had risen to 73,000.

Matthew Tuttle, Chief Investment Officer and Founder of Tuttle Tactical Management, said, “I think the previous expectations about immigration issues and how these two companies would benefit did not materialize, and I’m not very sure they will in the future.” He added that these companies are not “the obvious Trump trade targets people initially thought they were.”

However, Sharma and Gomez still expect these two stocks to outperform the market this year. Data shows that among analysts tracking these companies, not only they hold this view—currently, neither company has a “hold” or “sell” rating. Gomez stated, “The numbers will continue to grow, based solely on the contracts they signed in 2025, which should provide a good positive push to both companies’ revenue and EBITDA. The current situation of these stocks is essentially similar to their position before the election.”