The Legacy Defense Trade: What the SpaceX IPO Means for Boeing and Lockheed Martin

By Ian Gross | The Big Market Report

The SpaceX IPO is going to be the biggest story in markets for the next several months. But while everyone is focused on whether Elon Musk's rocket company is worth $1.75 trillion, a quieter and arguably more important question is forming in the background: what happens to the stocks that SpaceX has been quietly dismantling for the past decade?

Boeing (BA) and Lockheed Martin (LMT) built their defense and space franchises in an era when the federal government had two choices for getting things into orbit. That era is over. And the SpaceX IPO is not just a capital markets event — it is the moment the market finally has to price in what that means.

The ULA Problem Is Not Going Away

United Launch Alliance was supposed to be the answer. When Boeing and Lockheed formed the joint venture in 2006, the logic was straightforward: combine resources, eliminate redundancy, and present a unified front against any future competition. It worked for a while. Then SpaceX showed up.

By April 2025, the Space Force had awarded Phase 3 Lane 2 launch contracts to three providers — SpaceX, Blue Origin, and ULA — covering approximately 54 missions from 2027 to 2032. SpaceX captured roughly 60 percent of the total contract value at $5.9 billion. ULA, the Boeing-Lockheed joint venture, received $5.4 billion for the remaining missions. On paper that looks competitive. In practice, SpaceX is flying Falcon 9 rockets that have been operational for years at a fraction of the cost, while ULA is still ramping up its new Vulcan Centaur rocket after years of delays.

The February 2026 Motley Fool headline said it plainly: "Boeing and Lockheed's Space Joint Venture Is Falling Apart." Vulcan Centaur has struggled to reach the launch cadence ULA needs to remain cost-competitive, and Blue Origin's entry into the market has added a third competitor eating into the margins that ULA once took for granted.

Boeing's Defense Segment Is Still Bleeding

Boeing's commercial recovery in 2025 was real — revenue hit $89.5 billion on 600 deliveries, a 34 percent year-over-year jump. But the defense segment tells a different story. Boeing Defense, Space and Security generated $19.8 billion in full-year 2025 revenue, and Q4 2025 operating margin came in at negative 6.8 percent. The company expects to spend nearly $4 billion in cash in 2026 as it works through fixed-price defense contracts that have been hemorrhaging money for years.

The KC-46 tanker program, the T-7A Red Hawk trainer, and the MQ-25 drone tanker have all run billions over budget. Boeing landed a $101 million Air Force contract for KC-46 support in early April 2026, which is fine, but it is the kind of maintenance and sustainment work that does not move the needle on the structural problems in the defense business. The high-margin, high-prestige launch contracts are increasingly going to SpaceX.

The NASA Angle

The space side of Lockheed's business took a direct hit in March 2026 when NASA expanded SpaceX Starship's role in the Artemis lunar program at the expense of Boeing's Space Launch System. NASA is not abandoning the Orion capsule — Lockheed builds that — but it surgically removed Boeing's SLS from the lunar transit role. That is a program Boeing has been counting on for years. Losing the primary launch role to Starship is not a death blow, but it is another data point in a consistent pattern: when NASA or the Pentagon has a choice between SpaceX and legacy contractors, SpaceX is winning.

What the IPO Changes

Here is the part that does not get enough attention. SpaceX as a private company has been aggressive on pricing because it could afford to be — Musk has been willing to undercut competitors to build market share. As a public company with institutional shareholders and quarterly earnings calls, that calculus changes. There will be pressure to expand margins, not compress them.

That could actually be a modest relief for Boeing and Lockheed on some contracts. But it cuts the other way on the acquisition front. A publicly traded SpaceX with a liquid stock and a $1.75 trillion market cap can use that stock as currency to acquire talent, technology, and smaller defense contractors. The legacy players will find it harder to compete for engineering talent when SpaceX can offer equity in a company the market is valuing like a tech giant.

The Investor Playbook

Lockheed Martin is in a structurally better position than Boeing heading into this. LMT's core franchise — F-35 production, missile defense systems, the PAC-3 interceptor program — is largely insulated from SpaceX competition. The Pentagon in early 2026 agreed to triple PAC-3 interceptor production from 600 to 2,000 annually under a seven-year framework, which is exactly the kind of durable, high-volume government contract that does not have a SpaceX equivalent. Lockheed stock is projected to trade between $568 and $724 in 2026 according to most analyst models, reflecting steady but unspectacular growth.

Boeing is the more complicated call. The commercial recovery is real and the stock has moved on it. But the defense segment is a drag that is not going away quickly, and the loss of prestige launch programs to SpaceX represents a long-term erosion of the business that is hard to model precisely. Boeing is a turnaround story, not a compounder.

The SpaceX IPO will pull capital from somewhere. Some of it will come from existing aerospace and defense positions. Investors who want exposure to the new space economy will rotate toward SpaceX and away from the legacy names. That is a headwind for both BA and LMT in the months around the IPO pricing, regardless of their underlying fundamentals.

The Bottom Line

Boeing and Lockheed are not going away. They have decades of relationships, classified programs, and manufacturing infrastructure that SpaceX cannot replicate overnight. But the SpaceX IPO is the moment the market formally acknowledges that the launch business — once a duopoly — is now a competitive market. The multiple compression that implies for ULA-dependent revenue streams has not fully played out yet.

Watch the IPO pricing window carefully. If SpaceX comes in at the high end of its valuation range, the rotation trade out of legacy aerospace could be sharper than most models currently assume.

The Big Market Report is an independent financial news publication. Nothing in this article constitutes investment advice. Always conduct your own research and consult a qualified financial advisor before making investment decisions.