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Private Prisons, Crypto Stocks Even Outperform Tesla After Trump Victory

by November 11, 2024

Topline

Tesla may have been the highest-profile stock market winner last week, but there are several stocks that have outperformed the Elon Musk-led auto company thanks to similar optimism about macroeconomic conditions under the new administration.

Important facts

The 39 percent gain in Tesla shares from last Tuesday’s close through Monday is by far the largest of any of the 101 American public companies valued at $100 billion or more, more than double the 18 percent rally of the second-highest performer This group, the software defense contractor Palantir.

But other smaller companies have overtaken Tesla since Donald Trump secured a second term as president. Several are law enforcement areas that stand to benefit from Trump’s border controls and crackdown on crime.

The only S&P 500 company to outperform Tesla is stun gun parent company Taser Axon Enterprise at 40%, while holding shares in billion-dollar private prison companies CoreCivic And Geo group— which are Immigration and Customs Enforcement contractors — are up 76% and 75%, respectively, since Election Day.

And a number of cryptocurrency-related stocks have surged in the last week as the world’s largest digital asset shot to a record high above $86,000 as traders reacted to Trump’s embrace of the industry on the campaign trail.

Crypto exchange Coinbase Shares are up 67% since last Tuesday Microstrategya 35-year-old enterprise software company best known for its roughly $25 billion in Bitcoin holdings saw a 49% gain, while shares of crypto-focused retail investor platform Robinhood rose 31%, narrowly underperforming Tesla.

Bitcoin mining stocks saw a similar rise as companies involved in the energy-intensive process of unlocking Bitcoin on the digital blockchain received a double boost from rising interest in cryptocurrencies and hopes of easing regulations on the industry – shares of CleanSpark, Riot Platforms And Marathon Digital have increased by 67%, 54% and 54% respectively.

Why private prison stocks have risen so much

CoreCivic and Geo Group shares were further boosted on Monday by Trump’s appointment of Tom Homan as his “border czar,” with the former acting ICE director a proponent of a “humane” but “necessary mass deportation.” In a conference call last Thursday, Geo Group Chairman George Zoley said he expected the government to fund 70,000 to 100,000 beds in ICE detention centers, about double the 41,500 beds currently funded. Geo Group may increase the number of beds at its ICE detention centers from 13,000 to 31,000 by next year, predicts Brendan McCarthy, an analyst at independent research firm Sidoti. McCarthy forecasts Geo Group will generate $3 billion in revenue in 2025, a 24% increase from total revenue in 2024.

Important background

U.S. stocks have risen almost across the board since the election, with the blue-chip Dow Jones Industrial Average up 5% since last Tuesday and the small-cap Russell 2000 up 8%. There are several tailwinds to this broad rally, but the potential for lower corporate tax rates and an expected increase in merger and acquisition activity in the incoming Trump administration are among the key drivers of the upswing in financial markets. Bernstein analyst Gautam Chhugani, who correctly predicted last week that Bitcoin would rise above $80,000 in the event of a Trump victory, titled his weekly note to clients “Welcome to the Crypto Bull Market – Buy Anything, what you can do,” reflecting the almost euphoric mood that prevails among crypto investors.

Further reading

ForbesWhat you should know about Trump’s new “border czar” Tom HomanFrom Mary Whitfill Roeloffs

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