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Prison REITs' Stock On The Rise Following Thursday’s Shocking Announcement From US Justice Department

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Private prison REITs showed signs of recovery after Thursday’s historic plunge, when the US Justice Department announced it would cease its 10-year experiment of hiring private companies to manage soaring prison populations.

The nation’s largest private prison operator, Corrections Corp of America, suffered a 35% fall to $17.57 when trading closed Thursday, and GEO Group Inc ceased trading following a 40% dive to $19.51.

But the shock that led to historic lows began to mend today as Corrections Corp’s stock rose 13% to $19.78 by midday. GEO Group trading increased as well, with shares rising by 21% to $23.69, Bloomberg reports.

“The massive falloffs in the stocks imply that the risk will spread to other federal, state and local jurisdictions,” Canaccord Genuity analyst Ryan Meliker told Bloomberg. “While this is possible, we believe it is unlikely.” Ryan added that the plummeting stocks were more fear-based than a risk in cash flows. [Bloomberg]