Lockheed Martin stock is struggling this year as concerns about US politics and competition rise. After peaking at $683 in March, LMT dropped to the current $548. Focus will remain on the upcoming earnings, the midterm elections, and the fact that it is slowly forming a head-and-shoulders pattern.
Lockheed Martin struggles as investors bet on Democrats’ victory
One key reason why Lockheed Martin and other defence contractors have slumped this year is the upcoming midterm elections. Most polls show that Democrats will win the House of Representatives. Odds of the party flipping the Senate have continued rising on Polymarket and Kalshi.
The rising odds of Democrats winning the Senate and the House have coincided with the falling approval rating of President Donald Trump. Most recent polls have placed his approval rating at less than 35%, and this decline will likely continue. Many Americans are complaining about corruption and rising gasoline prices.
A Democratic sweep would have an impact on defence spending, where Trump is seeking to raise the budget to $1.5 trillion from the current $1 trillion. Even with the Republicans controlling the Senate and the House, Trump has not managed to raise this funding. One reason for this is that the relationship between Pete Hegseth and Congress has soured.
Congress has also been unable to pass the extra spending that Trump has requested to fund the Iranian war. Hegseth has been asking for nearly $100 billion in supplementary funding to replenish the stocks used during the war.
Rising competition from Anduril
Lockheed Martin stock has also slumped as investors react to the rising competition from Anduril, the startup started by Palmer Lucky, who is linked to the Trump administration.
Anduril, which is now valued at over $60 billion, is working on a new line of missile interceptors that will be cheaper and easier to build than Patriot and THAAD. Steelfin will cost about a third of the current Patriot missiles. It will also be compatible with the current launchers.
As a result, there is a likelihood that the company will gain market share when the interceptors start selling. This is notable because THAAD and Patriot have been the workhorse of the US military in the past few decades.
In addition to Anduril, more companies, especially in the US and Europe, are seeking to disrupt Lockheed Martin’s business as warfare changes. Such a move will likely affect its revenue growth and margins.
Looking ahead, the next important catalyst for the LMT stock is the upcoming earnings report this week, which will provide hints on its performance. Wall Street analysts expect the upcoming earnings report to show that its revenue jumped 9.9% in the third quarter to $20.4 billion, with its earnings-per-share rising to $7.52 from $6.95 in the same period last year.
Lockheed Martin stock price technical analysis
LMT stock chart | Source: TradingView
The daily chart shows that Lockheed Martin shares have been in a downward trend in the past few months. After peaking at $683 in March, they dropped to $496 as Trump’s approval rating continued falling.
The ongoing rebound is happening because $496 was an important support level that coincided with the lowest level in March, June, and July this year. It also coincided with the 61.8% Fibonacci Retracement level.
The risk, however, is that the stock is in the process of forming a head-and-shoulders pattern, a common bearish reversal pattern. Therefore, it will likely have a bearish breakout, potentially to the key support level of $496.
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