Lockheed Martin's 0.7% Rally Overshadowed by $510M Volume Slide Below Top 500 as Earnings and Legal Challenges Mount

Lockheed Martin (LMT) closed 0.70% higher on August 18, 2025, with a trading volume of $510 million, a 22.77% decline from the previous day. The stock’s performance followed a challenging earnings report and ongoing legal scrutiny. In its fiscal Q2 2025 results, the defense contractor reported earnings per share of $1.46, significantly below the estimated $6.52, driven by $1.6 billion in program charges. Revenue of $18.2 billion remained flat year-over-year but fell short of analyst expectations. Operating profit dropped 65% to $748 million, while free cash flow turned negative at -$150 million.

A securities class action lawsuit, Khan v. Lockheed Martin, has intensified investor concerns. The case alleges the company misrepresented its internal controls and risk management practices, particularly in the Aeronautics and Rotary and Mission Systems segments. These segments reported combined pre-tax losses of $1.52 billion in Q2 2025, attributed to “performance issues” in classified programs and international contracts. The stock fell nearly 11% following the earnings announcement, sparking investigations into whether disclosures adequately reflected operational risks.

Despite these challenges, management maintained its full-year guidance, citing stable demand for defense platforms like the F-35 and missile systems. However, the $166.5 billion backlog has declined, reflecting contracting cycles for major programs. The company’s recent investments in NGAD technologies and cost-reduction initiatives highlight its focus on long-term competitiveness. Investors remain cautious, balancing robust order visibility against execution risks in high-complexity projects.

The strategy of buying the top 500 stocks by daily trading volume and holding them for one day resulted in a total profit of $2,340 from 2022 to the present, with a cumulative return of 23.4%. This indicates a moderate but not exceptional performance for volume-based trading approaches.