Lockheed Martin (NYSE: LMT) shares dropped on Wednesday as investors reacted to news that raises questions about the firm’s future momentum of its flagship F-35 fighter jet program.
As of press time, LMT stock was down almost 6%, trading at $448.70. This decline extends the stock’s weekly losses to more than 7%.
Why LMT stock is crashing
The selloff seems to be an investor reaction to a report that the United States Air Force intends to cut its F-35 jet orders in the upcoming fiscal year.
According to a Department of Defense procurement document cited by Bloomberg, the Air Force plans to order just 24 jets instead of the 48 requested last year.
The proposed budget includes $3.5 billion for the aircraft, down from previous levels, and $531 million for advanced material acquisition.
The Navy’s F-35 carrier variant is also facing cuts, with the Pentagon requesting 12 jets, down from 17 approved by Congress last year. The Marine Corps is set to receive two fewer jets under the current plan.
These cuts are particularly troubling for American defense contractors, as the F-35 program accounts for about 30% of the company’s revenue.
At the same time, production has already been slowed by delays in a key technology upgrade.
Adding to the uncertainty, CFO Evan Scott is on record stating that a finalized contract for the F-35 is expected in the second half of the year, possibly by the end of June.
Notably, Lockheed had previously projected two major contracts, possibly one coming in the first half of 2024 and another by year-end 2025.
Beyond the F-35 jets, the general defense sector is bracing for possible budget cuts under President Donald Trump’s administration. Specifically, the Pentagon’s move aligns with a larger plan to lower military spending by 8% over the next five years.
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