Lockheed Martin (LMT 2.77%), the giant defense stock that makes America's vaunted F-16, F-22, and F-35 fighter jets, tumbled 5.5% through 11:40 a.m. ET Wednesday morning. And why?
As Bloomberg reports, the U.S. Pentagon is reducing its budget request for new F-35 stealth fighter jets in fiscal year 2026.
Image source: Getty Images.
Thanks, but no tanks (er, fighter jets)
"A U.S. Defense Department procurement request document ... asked for 24 of the planes, down from 48 that were forecast," reports Bloomberg. That's still a $3.5 billion order, implying a hefty price tag on the planes the Pentagon does want. And the Pentagon requested $531 million extra to purchase parts to build the next batch of F-35s (which means there will be a next batch).
But logically, it also implies the Pentagon will pay Lockheed $3.5 billion less than it was expected to, for this year's planes. Most of the reductions appear to be in orders for conventional takeoff-and-landing F-35A aircraft for the Air Force, although purchases of Navy F-35Cs and USMC F-35Bs are also taking a hit.
Is Lockheed Martin stock a sell?
There's no need to panic, though, if you own Lockheed Martin stock. While $3.5 billion may sound like a lot of money to you and me ("a billion here, a billion there... soon you're talking real money"), and objectively, it is a lot of money, Lockheed Martin did $71 billion in business last year. A $3.5 billion haircut is only a 5% reduction in expected revenue, and it's only for a single year.
Meanwhile, Lockheed Martin is up for potentially tens of billions of new contracts for F-55 and upgraded F-22 contracts. All things considered, I suspect this stock is going to do just fine.
