Lockheed Martin‘s (NYSE: LMT) F-35 stealth fighter jet is the definition of cutting-edge technology and like any other new technology, has been very expensive to design, develop and test.  While this particular fighter has been plagued with a series of design flaws and cost-overruns, Lockheed has a winning history for the American defense industry and it’s allies by developing:

• The world’s most popular fighter, the F-16 Falcon
• The C-130 Hercules, which is the world’s most popular military airframe,  (which is used for cargo, airborne refueling, command, control, communications, and close air support)
• Subsidiary Sikorsky produces the world’s most popular all-purpose combat helicopter, The Blackhawk

During the last year of development, the F-35 has been slandered and targeted by other competitors and some potential end-users.  With total program costs of more than $1.5 Trillion, the F-35 is an easy target.  In a recent Defense Department press release, details of  a record $7.2 billion order for new F-35’s gave new life to old criticism.  Most recently, President-Elect Trump weighed in:

The market response only a few hours after the tweet was a loss of nearly $5 Billion in market cap for Lockheed.  At nearly $100 Million per aircraft, could the company offer America better pricing? It’s hard to say without having a hard look at their development budget, but one thing is for sure, defense contracts that have been historically negotiated by politicians are going to look very different under the new administration.

Any seasoned salesman will tell you that “price is only an issue in the absence of value.”  Our best guess is that once Mr. Trump has a chance to see the capabilities of Lockheed’s latest and greatest military hardware, he’ll have a better understanding of value and future negotiations will be on somewhat more of a level playing field.  For the time being however, even the best defense contractors are on the defense from @realDonaldTrump‘s Tweets.