Lockheed Martin Shares Plunge 4.26% After Pentagon Slashes F-35 Fighter Jet Orders

Defense giant becomes one of aerospace and defense sector’s worst performers this week as reports surface of Pentagon cutting fighter procurement request by 50 percent, signaling potential shift in military spending priorities.

Lockheed Martin shares tumbled 4.26% in Wednesday trading after reports emerged that the Pentagon plans to slash its F-35 Lightning II fighter jet procurement request to Congress by half, from 48 aircraft to just 24 planes for the upcoming fiscal year.

The significant stock decline came after Reuters reported that the Department of Defense would dramatically reduce its F-35 request as part of standard procurement procedures. While these reports could not be immediately confirmed by major sources, they triggered immediate investor concern about the future of the program that represents 30% of Lockheed Martin’s total revenue.

The defense contractor, among the largest in the industry, became one of the aerospace and defense sector’s worst performers this week following the news. The stock drop occurred on a day when the S&P 500 posted marginal losses and the Dow Jones Industrial Average finished flat.

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Pentagon Requests $3.5 Billion for Reduced F-35 Fleet

According to the reports, the Air Force is now planning to seek $3.5 billion from Congress for F-35 Lightning II aircraft procurement, with an additional $531 million requested for advanced materials. The stealth fighter, considered the most advanced multirole combat aircraft ever developed, serves all branches of the U.S. military and numerous allied nations.

The Pentagon also requested funding for only 12 F-35C fighter jets, the carrier-capable variant for Navy aircraft carriers, down from the 17 jets previously approved by Congress. The Marines will see a two-unit reduction in their order, demonstrating the Pentagon’s commitment to reducing spending on the advanced fighter platform this fiscal year.

In a statement to Barron’s, Lockheed Martin responded to the development: “The F-35 is the cornerstone of the battlespace for the U.S. military…We will continue to work closely with the Administration, Congress, and our customers to deliver this game-changing capability as the budget process continues in the months ahead.”

Program Faces Ongoing Challenges

The F-35 development program has struggled with continual delays and technological upgrades, though Lockheed Martin’s executive team noted in May that the company expects to receive a final contract for the F-35 Lightning II in the coming months. The prime defense contractor delivered 110 F-35 fighter jets to the United States and allied nations in 2024.

Critics of the program have argued for increased spending on contracts with non-traditional contractors like Palantir Technologies, highlighting the political nature of the fighter jet development program. Since the November 5 presidential election, Lockheed Martin stock has declined approximately 13%, while the S&P 500 has gained around 4% during the same period.

Defense Sector Shows Mixed Response

The interconnected nature of the defense industry meant multiple contractors with F-35 program ties saw stock declines Wednesday. However, RTX Corporation, formerly Raytheon Technologies, bucked the trend with shares rising 2.38% to deliver a year-to-date return of 22.55%. RTX owns Pratt & Whitney, which manufactures the F135 engine powering the F-35 Lightning II.

Following Wednesday’s closing bell, Lockheed Martin emerged as the worst-performing stock among the ten largest U.S. defense contractors, posting year-to-date losses of 6.04%. The next two underperforming companies in the sector’s top ten, General Dynamics and Northrop Grumman, both returned profits of approximately 4% to investors, according to Yahoo Finance.