What happened
Shares of defense contracting pure play Lockheed Martin (LMT 1.88%) -- which got quite a lift on Tuesday after Germany announced plans to triple its 2022 defense budget, and Wolfe Research upgraded LockMart stock in response -- is giving back its gains on Wednesday.
As of 10 a.m. ET, Lockheed Martin stock is down 4.4%.
Image source: Getty Images.
So what
Why is Lockheed Martin stock -- a defense stock, let's not forget, in a time of conflict in Europe -- down? The only significant news that has happened between yesterday's share price increase and today's share price decrease was President Joe Biden's State of the Union address last night.
Presumably, given the geopolitical situation, investors were hoping to hear the U.S. president announce significant increases in defense spending that would mean new revenue streams for Lockheed Martin and its peers last night. But in fact, the only mention of "defense" in the entire address was a reference to DARPA, the Defense Advanced Research Projects Agency, in the context of a plan to create a DARPA-like agency ("ARPA-H, the Advanced Research Projects Agency for Health") to research potential cures for cancer.
Now what
The president did mention in his State of the Union address that the United States is "providing support to the Ukrainians," including "more than $1 billion in ... military assistance." But in the context of a $600 billion-a-year defense budget, that's a tiny fraction of 1%, and probably not enough to move the needle on Lockheed Martin stock.
To the contrary, when you consider that the defense budget for fiscal 2022 is currently proposed at $715 billion, the suggestion that defense spending might be only $600 billion even implies a reduction in the defense budget that could diminish Lockheed Martin's revenue going forward.
No, I suspect that is most definitely not what Lockheed Martin shareholders wanted to hear last night.
