Why Lockheed Martin Shares Plunged Today

Core Viewpoint - Lockheed Martin's shares fell 7% following the announcement that Boeing was awarded a $20 billion contract to produce the F-47 fighter jet, marking a significant loss for Lockheed, which was favored to win the contract [1][2]. Group 1: Contract Award Details - The Trump administration awarded Boeing the initial $20 billion contract for the F-47, a sixth-generation fighter jet for the U.S. Department of Defense [2]. - Lockheed Martin previously produced the fifth-generation F-35 fighter jet, which began production in 2006 after winning the contract in 2001 [2]. Group 2: F-35 Program Concerns - The F-35 program has faced criticism for being the most expensive weapon system in history, with production delays and rising costs [3]. - The projected costs to sustain the F-35 program increased by 44% since 2018, from $1.1 trillion to $1.58 trillion, with the annual maintenance cost per F-35 now at $6.6 million, up from the original projection of $4.1 million [3]. Group 3: Implications for Lockheed Martin - The loss of the F-47 contract introduces uncertainty to Lockheed's medium-term growth profile, compounded by increased scrutiny on defense spending under the new administration [5][6]. - Despite the setback, Lockheed is expected to sustain F-35 revenue and profits for decades, as the U.S. plans to buy approximately 2,500 F-35s by the 2040s and maintain the program into the 2080s [5].