(Bloomberg) -- The meme-stock craze has turned rental cars, video games and movie theaters into day traders’ playthings over the past year. The fad took a darker turn Wednesday as the Reddit horde brought prisons into the mix.
Retail traders drove shares of Geo Group Inc. up as much as 73%, even as the company struggles for survival in a world turning on private-prison operators. As of the close, Geo surged a record 38%.
U.S. President Joe Biden’s administration plans to sever ties with the industry, and lenders including Bank of America Corp. have pledged to no longer finance prisons. When S&P Global Ratings downgraded its assessment of Geo’s creditworthiness in March, it noted that prison operators face “ongoing social and governance risks.” A proposed Alabama bond sale for a private-prison firm was derailed earlier this year by opposition from activist groups.
The action in Geo shares seemed to originate on the same message boards driving frenzied gains in GameStop Corp. and AMC Entertainment Holdings Inc. After all, for retail traders on Reddit’s WallStreetBets forum and elsewhere on social media, the fundamental challenges facing Geo are beside the point. And there is irony in the fact that the freedom of actual humans is at stake with Geo, which conflicts with the loud populist cries frequently coming from Redditors.