A class action lawsuit was filed against Lockheed Martin (LMT) by Levi & Korsinsky on July 28, 2025. The plaintiffs (shareholders) alleged that they bought LMT stock at artificially inflated prices between January 23, 2024, and July 21, 2025 (Class Period) and are now seeking compensation for their financial losses. Investors who bought Lockheed Martin stock during that period can click here to learn about joining the lawsuit.
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Lockheed Martin operates as an aerospace and defense company, offering products and services in aeronautics, missiles and fire control, rotary and mission systems, and space. LMT is one of the largest contractors for the U.S. Department of Defense (DoD) and other U.S. federal government agencies.
The company’s claims about its risk-adjusted contracts, along with related internal controls and procedures, are at the heart of the current complaint.
Lockheed Martin’s Misleading Claims
According to the lawsuit, LMT and three of its current and/or former senior officers (the Defendants) repeatedly made false and misleading public statements throughout the Class Period. In particular, they are accused of omitting truthful information about the efficacy of certain internal controls and procedures, and ancillary issues, from SEC filings and related material.
During the Class Period, in an annual report dated January 23, 2024, the company explained that its contracts typically allow it to recover costs through product and service pricing. Most contracts are negotiated with customers who require estimated costs upfront, and U.S. Government contracts usually allow recovery of actual costs plus a reasonable profit.
Moreover, in a quarterly report dated April 23, 2024, Lockheed Martin noted that it operates several classified U.S. Government programs that cannot be detailed. The financial results of these programs are included in the company’s overall and segment reporting and are subject to the same oversight and internal controls as other programs.
Finally, in a report dated July 23, 2024, LMT explained that for contracts using the percentage-of-completion method, it reviews risks related to technical requirements, schedules, and costs at the start. These risks are factored into sales, cost estimates, and initial profit rates.
However, subsequent events (detailed below) revealed that the defendants failed to inform investors about the company’s inability to thoroughly review program requirements, technical challenges, schedules, and risks.
Plaintiffs’ Arguments
The plaintiffs maintain that the defendants deceived investors by lying and withholding critical information about the company’s business practices and prospects during the Class Period. Importantly, the defendants are accused of misleading investors by overstating the company’s ability to meet its contract commitments in terms of cost, quality, and schedule.
The information became clear after a series of partial disclosures on July 22, 2025, when Lockheed Martin released weak results for the second quarter of fiscal 2025. LMT announced that it had to report an additional $1.6 billion in pre-tax losses on classified programs, including $950 million tied to its Aeronautics Classified program due to design, integration, testing, and performance problems.
Moreover, it recorded other charges that reduced net earnings to $342 million, or $1.46 per share, reflecting the $1.6 billion in program losses and $169 million in other costs. Following the news, LMT shares dropped 10.2%.
To conclude, the defendants failed to inform investors about the inadequate procedures and controls that could potentially lead to large losses. Due to these issues, LMT stock has lost 17.2% over the past year.
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