×

Private prison stocks keep crumbling

A guard escorts an immigrant detainee from his 'segregation cell' back into the general population at the Adelanto Detention Facility, managed by GEO Group.
Getty Images
A guard escorts an immigrant detainee from his 'segregation cell' back into the general population at the Adelanto Detention Facility, managed by GEO Group.

Prison stocks slid again Tuesday, extending Monday's declines after the federal government said it will examine its use of privately managed immigration detention facilities.

The two major publicly traded prison stocks, Corrections Corporation of America and GEO Group, declined more than 4 percent and more than 7 percent, respectively.

With Tuesday's decline, both stocks were on pace for a weekly loss of more than 8 percent and down more than 40 percent for the month so far.

Department of Homeland Security Secretary Jeh Johnson announced Monday that the Homeland Security Advisory Council will create a subcommittee to "review our current policy and practices concerning the use of private immigration detention and evaluate whether this practice should be eliminated."

Representatives from both GEO Group and CCA told CNBC Monday that they welcome the review.

The announcement calls for the subcommittee to submit a report by Nov. 30.

The Department of Justice also recently announced that its Bureau of Prisons will begin phasing out the use of private contractors for federal prisons.

After the DOJ's Aug. 18 announcement, private prison stocks shed 50 percent of their value before bouncing back. Analysts called the market reaction to that announcement excessive.

Unlike the Department of Justice, the Immigration and Customs Enforcement does not maintain any of its own facilities.

— CNBC's Evelyn Cheng contributed to this report.

GEO 5-day performance

CXW 5-day performance