We came across a bearish thesis on Lockheed Martin Corporation (LMT) on wallstreetbets Subreddit Page by RugbyDov. In this article, we will summarize the bears’ thesis on LMT. Lockheed Martin Corporation (LMT)’s share was trading at $466.17 as of March 14th. LMT’s trailing and forward P/E were 20.90 and 17.12 respectively according to Yahoo Finance.
Lockheed Martin (LMT) is facing a crisis that the market has yet to fully grasp, presenting a major opportunity for investors who position themselves ahead of the fallout. While LMT has been a dominant force in defense, particularly with the F-35, the world’s most advanced fighter jet, recent geopolitical developments have thrown its business into turmoil. The aircraft, despite its reliability issues, has been the preferred choice for nations looking to upgrade their air forces, with contracts spanning decades and billions of dollars. However, the U.S. administration’s erratic foreign policy decisions, particularly regarding military contracts, have made global allies reconsider their dependence on American-made defense systems.
The turning point came when the President abruptly canceled military maintenance and support contracts for Ukraine, shaking confidence among U.S. allies. Although the decision was partially reversed, it raised serious concerns about the reliability of the U.S. as a defense partner. This uncertainty has already led to tangible consequences. Portugal, once a prospective buyer of the F-35, has announced it will seek European-made alternatives. More critically, Turkey, long denied access to the F-35 due to geopolitical tensions, has opted to purchase 40 fighter jets from the UK instead. The most significant blow came from Canada, which has signaled it will explore alternatives rather than proceed with its planned acquisition of 72 additional F-35s. While the initial batch of 16 aircraft is still on order, this reversal wipes billions off LMT’s future revenue pipeline, directly impacting the company’s valuation.
This situation represents a significant and likely irreversible shift in global defense procurement. Nations spend years deliberating over military aircraft purchases, factoring in not just performance but also long-term maintenance and political stability. The realization that a single presidential decision could render their fleets inoperable has forced governments to reassess their reliance on U.S. defense contractors. This issue extends beyond Lockheed Martin—if the F-35 program is at risk, other defense platforms, from missile systems to naval vessels, could face similar scrutiny. The ripple effects could spread across the entire U.S. defense industry, as countries seek alternatives that reduce their exposure to American political volatility.
With the market slow to react, this presents a clear trading opportunity. LMT’s stock still reflects sales that are effectively canceled, creating a mispricing that will eventually correct. As this reality sinks in, especially with upcoming earnings reports, downside pressure on LMT will intensify. Buying put options on LMT provides a high-upside trade, particularly if other nations follow Canada’s lead in diversifying away from U.S. defense suppliers. This shift could mark the beginning of a broader market correction, potentially leading to a black swan event that reshapes the entire industry.
Lockheed Martin Corporation (LMT) is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 65 hedge fund portfolios held LMT at the end of the third quarter which was 58 in the previous quarter. While we acknowledge the risk and potential of LMT as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than LMT but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article was originally published at Insider Monkey.