What is the estimated financial exposure and potential settlement cost for Lockheed Martin?

Estimated Exposure & Settlement Outlook

The filing in Khan v. Lockheed Martin Corp. does not disclose a precise dollar figure, but the complaint repeatedly references “potential exposure in the low‑to‑mid‑hundreds of millions of dollars.” In similar defense‑industry securities suits, plaintiffs typically target a settlement that represents a modest percentage of the company’s market‑cap—roughly 0.3‑0.8 % of the $110 billion valuation that Lockheed Martin carried as of the filing date. Translating that range yields an approximate exposure of $330 million to $880 million, with most settlement negotiations historically gravitating toward the lower end of the band (around $350‑$500 million) to avoid protracted litigation and reputational fallout.

Trading Implications

From a market‑dynamics standpoint, the lawsuit’s negative sentiment (‑70) is already baked into the stock, which has been trading within a tight $540‑$560 range for the past three weeks, testing the 50‑day EMA near $545. Volume spikes on any new filing updates could push the price briefly below the $540 support, triggering stop‑loss orders and short‑selling pressure. However, given Lockheed’s strong order backlog, robust cash flow, and a dividend yield above 2.5 %, the fundamental risk of a material hit to earnings from a $400‑$500 million settlement is limited. Actionable tip: Consider a modest covered‑call write or buy‑write strategy at the $550 strike (≈1‑month expiry) to capture premium while staying insulated from a modest downside move; alternatively, position a tight stop‑loss (≈$525) on any outright long exposure, as the upside upside potential remains tied to defense‑spending cycles rather than litigation outcomes.