Why Lockheed Martin Stock Popped, Then Dropped Today

Lockheed Martin (NYSE: LMT) is riding the market roller coaster on Friday.

In early trading, shares of the defense giant jumped nearly 3% on a Wells Fargo report calling the new fiscal year 2026 defense budget a "big win for defense stocks."

Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Continue »

No sooner had that report come out, though, than Bloomberg broke bad news for Lockheed: The Trump administration plans to end Space Launch System launches and terminate production of Orion space capsules (carried by SLS on NASA's Project Artemis moon missions) after just three launches.

Now Lockheed stock is down 1.9% as of 11:50 a.m. ET.

Good news and bad news for Lockheed

Wells Fargo notes the U.S. Pentagon could see its budget grow 13% year over year, to $961 billion, if Congress approves the administration's budget request. As the nation's largest pure-play defense contractor, Lockheed Martin could inherit a lot of this wealth -- good news that helped drive early gains for the defense stock.

Orion is another story.

Arguably Lockheed Martin's most important space product, the massively expensive, production-delayed, trouble-plagued Orion was expected to fly as many as 20 times under Project Artemis, generating billions of dollars for Lockheed. If the capsule only flies three times, Lockheed Martin's revenue stream looks at risk.

Image source: United Launch Alliance.

Is Lockheed Martin a sell?

But don't panic: Orion's a big space program for Lockheed Martin, yes. Each Orion nets about $900 million in revenue for Lockheed. But relative to Lockheed's share of a potential $150 billion increase in defense spending, Orion actually looks like small space potatoes.

At a P/E ratio north of 20, I can't call Lockheed Martin stock "cheap" exactly. But if you like the valuation on this stock before today's news, I don't think the cancellation of Orion should necessarily dissuade you from owning Lockheed Martin stock.

Should you invest $1,000 in Lockheed Martin right now?

Before you buy stock in Lockheed Martin, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Lockheed Martin wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $611,271!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $684,068!*

Now, it’s worth noting Stock Advisor’s total average return is 889% — a market-crushing outperformance compared to 162% for the S&P 500. Don’t miss out on the latest top 10 list, available when you join Stock Advisor.

See the 10 stocks »

*Stock Advisor returns as of April 28, 2025

Wells Fargo is an advertising partner of Motley Fool Money. Rich Smith has no position in any of the stocks mentioned. The Motley Fool recommends Lockheed Martin. The Motley Fool has a disclosure policy.