Lockheed Martin (LMT -1.82%) is riding the market roller coaster on Friday.

In early trading, shares of the defense giant jumped nearly 3% on a Wells Fargo report calling the new fiscal year 2026 defense budget a "big win for defense stocks."

No sooner had that report come out, though, than Bloomberg broke bad news for Lockheed: The Trump administration plans to end Space Launch System launches and terminate production of Orion space capsules (carried by SLS on NASA's Project Artemis moon missions) after just three launches.

Now Lockheed stock is down 1.9% as of 11:50 a.m. ET.

Good news and bad news for Lockheed

Wells Fargo notes the U.S. Pentagon could see its budget grow 13% year over year, to $961 billion, if Congress approves the administration's budget request. As the nation's largest pure-play defense contractor, Lockheed Martin could inherit a lot of this wealth -- good news that helped drive early gains for the defense stock.

Orion is another story.

Arguably Lockheed Martin's most important space product, the massively expensive, production-delayed, trouble-plagued Orion was expected to fly as many as 20 times under Project Artemis, generating billions of dollars for Lockheed. If the capsule only flies three times, Lockheed Martin's revenue stream looks at risk.

Image source: United Launch Alliance.

Is Lockheed Martin a sell?

But don't panic: Orion's a big space program for Lockheed Martin, yes. Each Orion nets about $900 million in revenue for Lockheed. But relative to Lockheed's share of a potential $150 billion increase in defense spending, Orion actually looks like small space potatoes.

At a P/E ratio north of 20, I can't call Lockheed Martin stock "cheap" exactly. But if you like the valuation on this stock before today's news, I don't think the cancellation of Orion should necessarily dissuade you from owning Lockheed Martin stock.