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The stock market is reacting to the first 2024 presidential debate and prison stocks could be the winner based on what was said by the two candidates Thursday night.
What Happened: A public company co-founded by former President Donald Trump was in the spotlight during the week heading into the election, but it may have to take a back seat to a new investment idea for the 2024 election.
Shares of Trump Media & Technology Group (NASDAQ:DJT) were up 13% in premarket trading Friday before falling and trading in the red by midday. The stock surged by double digits last week as investors saw it as a prime opportunity to gain exposure to Trump.
While the Trump-connected social media stock couldn't hold its gains after the debate, two prison stocks were enjoying a lift the morning after the debate.
The Geo Group (NYSE:GEO) and CoreCivic Inc (NYSE:CXW) are up 4% and 3% respectively at the time of writing.
The prison stocks are trading higher after immigration and the border were among the most talked about topics during the 2024 presidential debate.
Benzinga recently highlighted The Geo Group as one of the stocks recommended by Citron Research's Andrew Left. While Left is best known for his short calls, including betting against GameStop, he has been a bull of The Geo Group for some time.
"Definitely think the stock's going to $30," Left recently said.
Left said he started writing about the private prison company when it was $8 a share. "They do the job that no one wants to do."
He noted that the company handles immigration detention centers and prisons, and has government contracts in place.
According to Left, the Biden administration’s efforts to eliminate private prisons initially devastated the stock. However, with the news cycle now heavily focused on the migrant crisis, Left believes this presents the perfect setup for the company and its stock to rebound.
Along with Left, "Big Short" investor Michael Burry has also been bullish on The Geo Group.
Why It's Important: While many voters and investors were eager to hear the candidates discuss topics like cryptocurrency, cannabis, and artificial intelligence, none of these issues received significant attention during the debate.
A drinking game by the New York Post highlighted that Trump mentioned migrant crime twice during the debate, while the border was referenced 15 times overall. For comparison, Russia, which was anticipated to be a major topic, was mentioned 13 times.
Immigration is becoming one of the biggest topics for voters in the 2024 election. A recent Morning Consult poll of nationally registered voters revealed that 65% of voters consider immigration to be “very important” to their vote in the 2024 election, up from 50% who said the same in November 2022.
While Trump is known for his tough comments on immigration, President Joe Biden recently announced new restrictions on asylum for people who cross the southern border illegally.
The Geo Group and CoreCivic shares could be trading higher based on Trump being the perceived winner of the first 2024 presidential debate, but based on immigration taking center stage, prison stocks may be able to enjoy gains going forward with either candidate in the White House in 2025.
A planned second presidential debate could see immigration take center stage again, and both candidates are likely to use the topic on the campaign trail.
GEO, CVX Price Action: The Geo Group shares are up 4% to $14.11 on Friday, versus a 52-week trading range of $6.94 to $16.31.
CoreCivic shares are up 3% to $12.65 on Friday, versus a 52-week trading range of $9.06 to $16.54.
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