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Lockheed Martin Case Analysis

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Later on 12th December 2016, Trump slammed Lockheed Martin for the high cost expenditure tied with its F-35 program. The market reaction was quite immediate where the shares of the aerospace company tumbled more than 4% in early trade. Rational investors might have considered that the jet manufacturer was on the point to lose its military contract from the government due to the high cost involved. As a response to this, this tweet has spurred the investors to forgo on such investment, driving the prices down. A slight recovery from the losses was made the company’s shares but eventually ended up closing at about 2% lower. Furthermore, the company also slump by $4 billion in its market value right after the tweet of the president-elect. (Jr., 2017) However, on this day, Lockheed Martin was not the only stock …show more content…

The President expressed on social media, his disagreement for the ridiculously high costs involved in Lockheed Martin F-35 program and that he has turned to Boeing for the quotation of a comparable F-18 Super Hornet.(DeMarche, 2017) The market sentiment was low for Lockheed Martin’s stocks as investors’ hints about the company losing its contract with the government became higher. However, since Boeing was asked to price-out its military jet, the participants in the markets were keen to invest in Boeing with the thought that the company would quote a lower cost to win the contract. In reaction to this tweet, the company’s shares plunged by 2% while that of its competitor, Boeing saw a surge of 0.5%. (Wang, 2017) (Macias, 2017)Post-tweet the company’s valuation was promptly lowered by $1.2 billion. As mentioned earlier, prior to this tweet, Trump went on to Boeing for its expensive Air Force One program. This kind of flurry tweet on behalf of the President may generate competition but the risk of market instability should not also be ignored. (Olsen,

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