In a post on Twitter today, President-elect Donald Trump wrote that costs for Lockheed Martin’s F-35 jet project is "out of control." He tweeted, "billions of dollars can and will be saved on military (and other) purchases" after the inauguration next month.
Almost immediately, the stock price of defense behemoth dropped by over 4 percent in Wall Street trading. Its market value dropped $4 billion after Trump’s tweet. Reportedly, the hit the contractor took amounted to more than $28 million. Lockheed Martin's stock had risen by more than 19 percent this year.
Lockheed Martin has spent huge sums to minimize the price of the F-35 stealth fighter, which is designed to outsmart enemy radar by presenting a small signature to detect. Jeff Babione, who leads the project, told Reuters, "Since the beginning, we have invested hundreds of millions of dollars to reduce the price of the airplane by about 70 percent since its original costing, and we project it to be about $85 million in the 2019 or 2020 time frame." In the week before the election, the Defense Department and Lockheed Martin inked a deal worth $6.1 billion for the jets.
The Trump team told reporters today that the president-elect has the interests of taxpayers at heart.
Stock prices for General Dynamics and Boeing also dropped today by 2.87 and 0.72, respectively. Shares for Defense ETF's PowerShares Aerospace & Defense Portfolio and iShares U.S. Aerospace & Defense dropped by more than 1 percent.
According to CNBC’s market observer, Jim Cramer, Trump is breaking the mold. "I mean the president ... does he have the ability to say, 'Listen, we're going to take fewer product?' He does," He said. "Does he have the ability to say, 'Listen, we don't like these prices?' Historically, that's not what the president has done. People within the Pentagon have negotiated, but very high level."