The Düsseldorf-based defence group suffered a double hit on Thursday, with a scheduled dividend adjustment deepening a sell-off already fuelled by first-quarter results that fell short of market expectations. Shares tumbled to a 52-week low of €1,105, extending the previous day’s trough of €1,122.80 as the stock began trading ex-dividend.
Rheinmetall’s annual general meeting approved a payout of €11.50 per share for fiscal 2025, a 42% increase on the prior year that lifted total distributions to €369 million. The payment, due on May 15, triggered the automatic price reduction. But the technical adjustment only amplified a slide driven by fundamental concerns: revenue for the first quarter of 2026 came in at €1.94 billion, an 8% rise year-on-year, but still missed analyst forecasts by a notable margin. Operating profit climbed 17%, yet the overall tone disappointed investors.
Blue chips in the red
The stock now trades roughly 45% below its 52-week high of just under €1,995 set in September 2025 and has shed about 31% since the start of the year. The sell-off reflects more than just a quarterly hiccup. Dealers point to a mix of worries over the pace of operational execution, speculation that the Ukraine conflict could cool, and a broader reassessment of defence sector valuations. Nevertheless, Chief Executive Armin Papperger has promised a growth acceleration in the second quarter, sticking to full-year guidance of double-digit billion-euro sales and a 19% operating margin.
Analysts largely view the recent decline as overdone. Warburg Research upgraded Rheinmetall from “Hold” to “Buy” this week, even as it trimmed its price target to €1,550. Barclays remains constructive with a €1,450 target, while MWB Research sees fair value at €2,000. The consensus average price target stands at roughly €2,011, and even the most cautious forecast of €1,480 implies substantial upside from current levels.
Drone defence: a new frontier
Operationally, Rheinmetall is pushing beyond its traditional artillery and vehicle lines. Alongside Deutsche Telekom, it unveiled a joint initiative at the AFCEA security trade fair in Bonn aimed at protecting cities and critical infrastructure from drone threats. The division of labour is clear: Rheinmetall contributes sensor technology and physical countermeasures including jammers, interceptors, and potentially laser systems, while Telekom supplies mobile-network know-how. The collaboration builds on an existing pilot programme in the Port of Hamburg, where Rheinmetall has been working with local police and port authorities since December 2025.
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The partnership addresses a growing vulnerability: many commercial drones now use mobile networks rather than conventional radio frequencies for control, rendering traditional countermeasures less effective. Whether the alliance translates into concrete contracts remains to be seen – but the move signals the company’s intent to broaden its revenue base beyond battlefield hardware.
Eastern European orders and naval ambitions
Rheinmetall is also strengthening its footprint in Eastern Europe. At the BSDA defence fair in Bucharest, it showcased the Lynx KF41 infantry fighting vehicle, which Romania selected in April for a multi-billion-euro procurement programme. To meet surging demand for munitions, the group is scaling up production capacity for artillery shells, targeting an annual output of 1.1 million rounds by 2027.
The naval division, meanwhile, is gaining heft following the acquisition of NVL, which added four shipyards in northern Germany to Rheinmetall’s portfolio. These moves underscore the long-term growth story that management argues is being overlooked by short-term-focused equity markets.
For now, the disconnect between the company’s ambitious expansion plans and the stock’s depressed valuation is likely to persist until the second-quarter numbers provide the next test. With the dividend effect now behind it, the coming weeks will show whether the promise of accelerated growth can finally reverse the downward trend.
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