Donald Trump tweet sends Lockheed Martin stock plummeting

  • 13/12/2016
US President-elect Donald Trump is using Twitter to criticise defence contract costs (Getty)
US President-elect Donald Trump is using Twitter to criticise defence contract costs (Getty)

A Twitter attack by US President-elect Donald Trump has hit aerospace giant Lockheed Martin hard - dropping the defence contractor's share price by four percent.

That's an estimated loss of about $5.5 billion (US$4 billion) for the company.

Mr Trump criticised Lockheed Martin's F-35 fighter jet programme as too expensive, in his latest attack on large defence contractors.

"The F-35 program and cost is out of control," he wrote on Twitter. "Billions of dollars can and will be saved on military (and other) purchased after January 20th."

Shares of several other defence contractors also weakened after Mr Trump's comments.

Lockheed Martin's F-35 program leader, Jeff Babione, responded by saying the company understands concerns about affordability and has invested millions of dollars to reduce the jet's price.

Mr Babione said Lockheed's goal was to reduce the price of the F-35 by 70 percent from its original estimates.

"We project it to be about US$85 million (NZ$118 million) in the 2019 or 2020 time frame," he told reporters in Israel.

A week before Mr Trump won the November 8 presidential election, the US Defense Department and Lockheed Martin concluded 14 months of negotiations on their ninth contract for 90 F-35 fighter jets, the Pentagon said.

Lockheed won the contract, valued at up to US$7.18 billion (NZ$9.97 billion), in late November and has received an interim payment.

Trump campaigned on a promise to cut waste in federal government, and last week also used Twitter to target Boeing Co for its "out of control" costs on a new fleet of Air Force One planes.

The attacks on Boeing and Lockheed Martin raise concerns that the incoming Trump administration will threaten defence contractors' profit margins.

"His emerging habit of using Twitter as a bully pulpit could become a threat to controversial high profile programs," Cowen analysts wrote last week after Trump criticised the cost of Boeing's Air Force One replacement programme. "Even if Trump only launches a bombastic Twitter shout-out, this more aggressive approach to contractor relations could impact the stocks."

Reuters/Newshub.

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