Lockheed Martin (LMT) stock ended Wednesday’s trade at $456 falling nearly 4.5% in the day’s session. LMT had also fallen close to 7% during the day but managed to briefly recover from the slumber. It is also down nearly 7.5% in a week and is displaying weak sentiments in the charts. The decline extends to 6% losses year-to-date despite it being the top military aircraft maker in the US.
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Why Is Lockheed Martin (LMT) Stock Crashing?
Lockheed Martin stock plunged as investors initiated sell-offs this week fearing a decline in manufacturing. The sell-offs were a knee-jerk reaction to a report that the US government plans to cut F-35 jet orders for the next fiscal year. F-35 is the world’s most advanced and lethal fighter jet and cutting down on production will hamper Lockheed Martin’s prospects.
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LMT could crash further if the US eventually announces to cut down on procuring F-35 fighter jets. Bloomberg reported that the US plans to order only 24 F-35 jets and not 48, which was initially planned. That’s a 50% reduction in orders making Lockheed Martin stock walk on a tightrope this year.
The development would be troubling for the American defense industry as weapons and fighter jets are their sole breadwinners. A reduction in manufacturing would eat up on their revenues making balance sheets dwindle with meager profits. Around 30% of Lockheed Martin’s revenues come from the F-35 fighter jet orders which could majorly affect their stock’s prospects.
While the sell-off came from just the report, an actual announcement from the White House could send LMT plummeting. It is advised to avoid taking an entry position in Lockheed Martin stock now due to the upcoming turmoil. LMT could have more downturns this year as its top technological and advanced fighter jets would face a reduction in orders.