Lockheed Martin (LMT - Get Report) on Monday became the latest company to come under fire from President-elect Donald Trump's Twitter feed. As corporate America braces for further public shamings, Lockheed investors are looking to see if its stock will recover as well as past Trump targets have done.
Trump said before the market opened that Lockheed's much-maligned F-35 fighter program is "out of control," causing shares of the defense giant to fall as much as 5.4% before closing down $6.42, or 2.47%, to $253.11. Other defense-related stocks, including Northrop Grumman (NOC) , General Dynamics (GD - Get Report) and Raytheon (RTN - Get Report) also traded down between 1% and 3% following Trump's Lockheed attack.
The president-elect has used Twitter as a bully pulpit to go after companies and industries in the weeks since the election, criticizing Boeing (BA - Get Report) for the $4 billion price estimate for a replacement Air Force One program and Rexnord (RXN - Get Report) for plans to, in his words, "rather viciously" fire 300 workers and move industrial bearings production to Mexico. He also declared "I'm going to cut drug prices" in an interview with Time Magazine, sending a warning to investors in drug and biotech firms.
Fortunately for the companies, the Trump effect to date has been short lived. Rexnord shares closed on Friday, Dec. 2 at $20.28 apiece, falling about 1% on Dec. 5 after the weekend tweets but recovering to trade at $20.64 on Monday afternoon. Similarly Boeing lost more than 1% at open Dec. 6 following Trump's Air Force One tweet, but currently trades 2.6% above where it was prior to the tweet, and drug companies including Pfizer (PFE - Get Report) and AbbVie (ABBV - Get Report) , who each fell between 3% and 5% when the Time interview was released, have regained what they had lost.
To be sure, the benchmark Standard & Poor's 500 Index has risen almost 6% since Trump was elected as investors anticipate that a Trump presidency willl bring with it tax, regulatory and trade policies that are more favorable to U.S. corporations.
United Technologies (UTX - Get Report) , whose Carrier unit was a constant punching bag for Trump on the campaign trail and who agreed after the election to keep some of the 2,100 jobs set to move from Indianapolis to Mexico after negotiations with the president-elect, is currently trading at its highest level since Election Day.
Lockheed so far has not shown the same resilience, due more to investor concerns that a much-anticipated uptick in Pentagon spending might not translate into higher margins and outsized gains for the defense sector.
"Trump may have done more to reform the DoD's acquisition system by Twitter-shaming some of the nation's largest U.S. defense contractors (directly or indirectly) than the last four versions of the Pentagon's Better Buying Power combined," Cowen analyst Roman Schweizer wrote Monday referring to the Defense Department's internal cost cutting campaign.
Schweizer said the veracity of the claim "does not really even matter," because the public shaming figures to have an effect well-beyond what fact checkers say. Government employees "may feel emboldened" while company execs might be less aggressive in negotiations knowing a rebuke from the president could follow.
Trump has said a major goal of his administration is to save taxpayers money, and the president-elect has a kindred spirit in Senate Armed Service Committee Chairman John McCain, long a vocal critic of Pentagon waste.
If Trump is indeed talking to McCain, Northrop Grumman and its B-21 heavy bomber contract could be the next target. That award rankled McCain, and with Air Force chief of staff Mark Welsh being added to Northrop's board last week plays into Trump complaints about the revolving door between the Pentagon and industry.
Trump on Fox News Sunday said there should be a "lifetime restriction" on top defense officials going to work for contractors.
Outside of defense Amazon (AMZN - Get Report) was a frequent target on the campaign trail, as was Mondelez (MDLZ - Get Report) , Apple (AAPL - Get Report) and Macy's (M - Get Report) . Comcast's (CMCSA - Get Report) NBC Universal unit has been both a target of Trump and is his business partner in "The Apprentice."
-- Emily Stewart contributed to this report