Private prison operator GEO’s shares have rocketed, testing the good-versus-evil theory behind this year’s meme stock frenzy, writes johnsfoley.
have been walloped by President Joe Biden’s decision not to renew many of their federal contracts. Both were diversifying into other areas like halfway houses, but the transition is slow, and banks are reluctant to lend. GEO halted its dividend in April. One-third of its shares are out on loan, according to Refinitiv, suggesting many investors are betting against any turnaround. With $2 billion of debt due by 2024 and under $400 million of annual EBITDA, their pessimism is understandable.
If the rally continues, perhaps GEO could issue stock at an inflated value, as fellow meme AMC Entertainment did, pay down debt, and invest in something less entwined with human misery. That, though, is probably as far-fetched as the social-media fairy tale that created meme stocks in the first place. UPS "better" may be just as hard as "bigger"
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