Gun Shares Plunge as Private Prison Stocks Surge After Trump's Win

Shares of gun makers are plunging while two companies that operate detention facilities in the U.S. are breaking out in wake of Donald Trump's upset presidential victory.

Shares of Corrections Corp. rose as much as 60 percent before paring their surge to 34 percent by 10:14 a.m. in New York, while GEO Group Inc. was trading 18 percent higher by the same time, Bloomberg reported.

Those moves mean the stocks have recouped some of the losses they've registered since August, when the Department of Justice said it would start phasing out privately run jails. Analysts say President Trump would be likely to reverse that policy, and see an added windfall to the companies stemming from the difficulty of implementing his deportation agenda. 

"Private prisons would likely be a clear winner under Trump, as his administration will likely rescind the DOJ's contract phase-out and ICE capacity to house detainees will come under further stress." analysts at Height Securities LLC wrote in a note published this morning, referring to the Immigration and Customs Enforcement body by its acronym. Mass deportation of illegal immigrants would be likely to run into legal obstacles, "further necessitating a sizable contract detention population," the analysts said. 

 
The Republican nominee has been endorsed by the National Immigration and Customs Enforcement Council, the union that represents U.S. customs and immigration officials, and even the President-Elect's campaign rallies were characterized by chants of "Lock her up," aimed at his Democratic opponent.

“While we admittedly have little insight into how” a Donald Trump-supervised Justice Department would handle for-profit prisons, "our sense is that a reversal of this policy would be likely,” Compass Point analyst Isaac Boltansky wrote at the time of the August decision.

Meanwhile, shares of gun maker Sturm, Ruger & Company, Inc. (RGR) plunged nearly 15% near midday, following a week-to-date decline of 10.5%. Smith & Wesson Holding Corporation (SWHC) shares were down 16%, adding on to a week-to-date decline of 6%, MarketWatch reported. 

Voters rendered a split decision on gun control measures in the election, approving universal background checks for private firearms sales in Nevada while narrowly rejecting them in Maine, Reuters reported.

Gun safety advocates had poured millions of dollars into backing the initiatives in an effort to combat the political might of the gun lobby's National Rifle Association.

The measure was defeated in Maine by 51.0 percent of votes to 48.9 percent, or about 12,700 ballots, the Bangor Daily News reported. Nevada voters approved a similar proposal by 50.5 percent to 49.6 percent, state election officials said.

Both ballot initiatives were backed by Everytown for Gun Safety, the gun control group founded by billionaire former Mayor Michael Bloomberg, and polls had suggested the measures would pass.

The votes were seen as a crucial test of the gun safety campaign's decision to adopt a state-by-state strategy after efforts to pass legislation failed in Congress.

(Newsmax wire services Bloomberg and Reuters contributed to this report).