16 Weeks of Decline: How Lockheed Martin Lost Its Growth Driver16 Weeks of Decline: How Lockheed Martin Lost Its Growth Driver
It’s no secret that during wartime, the biggest profits are made by companies engaged in arms manufacturing. Those that work directly with the government, secure defense contracts, and leverage strong lobbying power to push their interests are especially successful. Today, we’ll discuss Lockheed Martin and its 16-week stock decline following a prolonged period of growth.
A Look Back: Why Did Lockheed Martin's Stock Surge?
Since early 2022, Lockheed Martin's stock demonstrated impressive profitability. The start of the war in Ukraine served as a major catalyst, nearly doubling the company’s market capitalization in two years.
This growth was entirely driven by increased demand for its products. Lockheed Martin didn’t massively increase production but raised prices due to the rising demand for weapons. Yes, production had to be scaled up, but the fundamental market principle states: when demand exceeds supply, prices rise.
This allowed the company to generate enormous profits and aggressively expand. However, like any market story, growth can't last forever. The situation began to change with the arrival of Donald Trump, whose key political stance is ending military conflicts. This became a death sentence for defense companies that had lobbied to extend the wars in Ukraine and Israel.
Financial Manipulations: How Lockheed Martin Used Buybacks
Any publicly traded company profits not only from its business operations but also from stock price manipulations. One such mechanism is buybacks, where a company repurchases its own stock to control its price and maximize profits.
How Does It Work?
Let’s assume Lockheed Martin’s stock is currently priced at $300. The company knows that upcoming catalysts could push the stock price to $500 or higher.
Lockheed Martin uses its free cash flow to buy back its own stock at $300.
The company executes contracts and projects that drive stock price appreciation.
When the stock reaches $500, Lockheed Martin sells the shares, securing a massive profit.
A single trade may not seem significant, but when executed on millions of shares, profits can reach hundreds of millions of dollars.
Stock buybacks are a common practice among corporate giants like Apple, NVIDIA, Tesla, Google, and Facebook. However, Lockheed Martin and other defense companies have used this tool aggressively during wartime.
Military conflicts not only boosted their direct sales and allowed them to raise prices but also enabled massive profits from stock market speculation. Companies like Boeing, Northrop Grumman, and Lockheed Martin extracted billions of dollars from the market using buyback strategies.
Why Did Lockheed Martin's Stock Start Falling?
For the past 16 weeks, Lockheed Martin’s stock has been on a steady decline. This directly correlates with changes in U.S. foreign policy:
Trump is focused on de-escalation and reducing military involvement.
The U.S. is shifting from direct conflicts to diplomacy.
Investors are taking profits, leading to mass sell-offs of defense stocks.
With Lockheed Martin's shares now in correction mode, the key question is: Where will the decline stop?
Where Will Lockheed Martin's Stock Find Support?
From a technical standpoint, there are two key support levels:
$400 – the most likely reversal zone.
$321 – an extreme scenario if macroeconomic conditions worsen.
Will Lockheed Martin’s stock drop to $321? Probably not. The company remains an industry giant with long-term government contracts, ensuring a steady revenue stream.
Once the current conflicts wind down, a phase of rearmament will follow. Military technology won’t disappear, and European leaders are already discussing creating a unified EU army—which will require new weapons and massive defense contracts.
Conclusion: Is Lockheed Martin's Decline Just a Temporary Adjustment?
Once Lockheed Martin's stock reaches $400, we could expect a reversal and renewed growth. In the long term, the stock may return to $500 or higher if:
New military contracts are signed.
European nations initiate defense expansion programs.
Public attention shifts away from war profits, allowing institutional investors to re-enter the defense sector.
What Should Investors Do?
Monitor geopolitical developments – War de-escalation may trigger short-term volatility, but long-term demand for defense products will remain.
Analyze buyback strategies – Lockheed Martin may continue repurchasing its own shares, potentially supporting a price rebound.
Avoid panic – The defense sector remains critical to U.S. economic and military policy, making these stocks long-term players.
Lockheed Martin’s stock decline is not the end of the story—it’s simply a new opportunity for investors willing to capitalize on the next growth cycle.
