Lockheed Martin Prepares Itself for Potential Changes Under Trump Admin

Lockheed Martin is reportedly preparing for changes as Elon Musk’s criticisms of the F-35 program trigger a reaction, coinciding with impending administration changes.

At a Glance

Elon Musk criticizes the F-35 fighter jets, sparking debate on modern defense strategies.
Musk’s comments impact Lockheed Martin’s stock, highlighting potential risks in defense stocks.
Lockheed Martin anticipates potential changes in defense spending with the Trump administration.
The F-35’s capabilities are weighed against emerging drone technology.

Elon Musk’s Criticism and Market Impact

Elon Musk recently criticized the F-35 program on the social media platform X, emphasizing that drone technology is more advanced than current manned fighter jets such as the F-35. Following this criticism, Lockheed Martin’s stock fell by 3.75%, hitting a four-month low, and affected other defense stocks like Northrop Grumman and RTX.

Musk’s advisory role on government efficiency lends weight to his views on defense spending, sparking further market reactions and discussions on future military capabilities and spending priorities.

🚨Update: American businessman and newly appointed head of DOGE Elon Musk slams ‘idiots’ making over priced and overly complex manned F-35 fighter jets as he prepares to force government to slash costs on this type of government waste. pic.twitter.com/nwvMeDbCgi

— US Civil Defense News (@CaptCoronado) November 25, 2024

F-35 and Defense Strategy

The F-35 program has long faced scrutiny over its cost and reliance on a single aircraft model. While Musk’s remarks fuel debates over military spending, analysts like Douglas Harned predict strong performance for defense stocks under President-elect Donald Trump, who is expected to prioritize a robust defense strategy. Despite technological advances in drones, the F-35 remains superior to its Russian and Chinese counterparts.

The U.S. military is actively developing unmanned combat aerial vehicles (UCAVs) to support manned fighters like the F-35, which is already seen as a key player in controlling drone swarms.

Lockheed Martin’s Transition Plans

As the Trump administration prepares to take office, Lockheed Martin braces for changes in defense spending. The company remains uncertain about the specifics of these changes, but potential shifts could involve reallocating funds among various programs. Lockheed’s CFO Jay Malave explains that defense contractors are accustomed to adapting quickly to new government priorities.

“I would expect, over time, that there will be different priorities in this administration. It typically happens, [that] the administration prioritizes things that maybe the prior one didn’t. I think the good thing about Lockheed Martin is that we’re accustomed to that. We know how to operate in that environment and how to adjust quickly,” Lockheed CFO Jay Malave said.

Lockheed Martin is also finalizing agreements on production lots 18 and 19 of the F-35, despite uncertainties around contract negotiations affecting their financial outcomes. The company expects price increases due to inflation and technological upgrades, projecting a financial recovery by 2025.