The GEO Group Inc. (NYSE: GEO) stock surged 38.36% to $8.8, the highest the stock has reached since mid-February. In the last two weeks, the stock has benefited from the meme stock craze.
GEO Group benefiting from “meme stocks” craze
The stock has a similar profile as other meme stocks that surged following Reddit chatter. GEO Group has a short interest comprising around 37% of its float. The company has had to deal with challenging events at the beginning of this year, sending the stock lower and making it attractive to short sellers. This came as a result of President Biden signing an order limiting the use of private detention centers by the government, which is likely to impact the company’s federal partnerships.
Short sellers are turning to stocks having high short interest, thanks to recent moves of AMC and Gamestock in the meme stocks craze. Interestingly some of the stocks do not have a large following on Reddit/WallSyrretbets or other social platforms, but it seems that short sellers are at risk in almost each crowded trade in the current market.
GEO Group makes corporate changes
Although there was no obvious reason for the price surge, the company recently announced a split of the CEO and Chairman roles in improving corporate governance. The company appointed Jose Gardo as the new CEO effective July 1, while former CEO George Zoley will be the Executive Chairman of GEO’s Board of Directors. However, these changes were insufficient to quadruple the shares in less than two weeks.
Investors have been selling REITs dealing with correctional institutions due to increased political pressure on such businesses. As a result, the stock has been under pressure for months, and now the stock depends on how short sellers manage the latest surge.