Wall Street is fickle.

I'd love to credit my background as a business reporter in the defense procurement space for knowing this valuable morsel of knowledge, but we all see it constantly. Investors react to even a hint of uncertainty, whether it be stalled budget negotiations on the Hill, potential shifts in interest rates, or – most recently – tweets from President-elect Donald Trump.

And make no mistake, the response to Trump's Dec. 12 tweet about F-35 costs being "out of control" was pretty astounding. As we reported, F-35 manufacturer Lockheed Martin saw its stock price drop from $252.33 to a low of $245.70 slightly after noon. That becomes more eye-popping when you consider it translates to a 4 percent drop in shares in early trading. Volume of trades was 7,080,271 by market close Dec. 12.

And it was only days prior when another top defense company experienced its own knee-jerk response from investors, albeit more modest, after Trump tweeted that the Air Force One replacement should be canceled. Boeing, which was selected to design the next presidential transport aircraft in 2015 at a $4 billion price, saw stock drop from about $152 when trading closed Dec. 5, to $150.84 when trading opened on Dec. 6 soon after the tweet went viral.

Where do we stand now? When markets opened Wednesday, Boeing was trading at nearly $160 a share. By 11 a.m., that was settling in at about $155. As for Lockheed, its share price has also recovered – opening at a little more than $252, and landing at almost $254 by 11 a.m.

But we're still talking about it, and here's why: The tweets – and the Wall Street reaction – were less about immediate impact to the bottom line for two of the biggest defense companies on the globe, or its competitors, many of which also felt an indirect hit. They were more about the messaging. And make no mistake, Trump was sending a message – regardless of whether you are of the camp that believes he had too little information to go on, or that believes he was right on.

As for those two camps, perhaps there’s truth coming out of both. On the one hand, hasty commentary about multibillion-dollar programs without proper briefings on the particulars of capability requirements and procurement approach aren’t productive for the market or a future president. (Taking back those words could be tricky, should Trump in retrospect decide he indeed needs the electronic suites and defensive systems currently slotted for the presidential plane, or realize that F-35 cost analysis is extremely complicated – particularly this late in the game.) On the other hand, challenging a market to prove a program’s worth isn’t a catastrophe either. Perhaps this is Trump’s rather bold mechanism for forcing a conversation about cost savings.

Ultimately, here’s what we learned: Defense companies, which investors typically regard as a safe bet – even remaining relatively steady in terms of share price during sequestration – suddenly face something of a quagmire.

About Jill Aitoro

Jill Aitoro is editor of Defense News. She is also executive editor of Sightline Media's Business-to-Government group, including Defense News, C4ISRNET, Federal Times and Fifth Domain. She brings over 15 years’ experience in editing and reporting on defense and federal programs, policy, procurement, and technology.

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