Al Root
Tesla CEO Elon Musk took a shot at a key technology for Lockheed Martin.
Ordinarily, investors might not care what a car company CEO thinks about cutting-edge defense technology, but Musk is also in charge of a commercial space enterprise and his proximity to President-elect Donald Trump makes almost any statement from the iconoclast an investor-level event.
Sunday morning, Musk tweeted a video of drones flying in various formations commenting "Meanwhile, some idiots are still building manned fighter jets like the F-35."
The F-35 is a Lockheed Martin product capable of stealth combat, supersonic flight, and delivering advanced ordnance. It's quite a jet. Russian and Chinese militaries have jets with similar technology.
Musk might want to reconsider his position. Modern fighter jets fill "irreplaceable roles," says AeroDynamic Advisory managing director Richard Aboulafia, adding drones can't intercept enemy bombers or launch from thousands of miles away to support naval operations or other strategic objectives.
Drones, of course, have a role in the military. They are getting better as technology changes. What's more, unmanned aerial vehicles and guidable bombs have been used for years. The Defense Department's "Replicator Initiative" seeks to deploy "thousands of autonomous systems across multiple warfighting domains."
It just isn't either/or. There is military equipment for different missions.
Only a few days ago, Admiral Samuel Paparo, commander of the U.S. Indo-Pacific forces, addressed drones in a talk at the Brookings Institution when asked if some of Ukraine's success thwarting Russian forces with drone technology would be applicable in a conflict between Taiwan and China.
"Alright, well the [Chinese military]'s got 2,100 fighters. They've got three aircraft carriers. They have a battle force of 200 destroyers," said Paparo, adding sarcastically "Oh well, Roger, we've got a couple drones. No problem."
Lockheed and Musk didn't immediately respond to a request for comment on Sunday.
How Musk's comment might impact shares of the defense contractor isn't clear.
Musk isn't only the CEO of Tesla, he's the CEO of SpaceX, the world's most valuable aerospace and defense company valued at some $250 billion. Lockheed's value, including debt, is closer to $150 billion.
Musk is now also jointly in charge of Trump's Department of Government Efficiency, a quasi-consultant advising the president about how to reduce government waste.
The intersection of the new department and defense is hazy. SpaceX COO Gwynne Shotwell said recently she doesn't like cost-plus government contracts. She prefers winning bids based on the lowest costs with bigger profits for better execution.
Coming into Monday trading, Lockheed stock had fallen about 0.2% since the Nov. 5 presidential election. The S&P 500 is up about 4.5%. Lockheed stock is up about 20% since the start of this year.
Defense budgets and the global threat level typically impact Lockheed's stock. Now there are Musk's tweets, too.
Write to Al Root at allen.root@dowjones.com
This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.
(END) Dow Jones Newswires
November 24, 2024 12:33 ET (17:33 GMT)
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