A record order book worth €73bn, a structural defence boom, and a stock that has shed over a quarter of its value since January. That is the paradox Rheinmetall takes into this week’s ILA Berlin air show—a venue that has become a proving ground for the company’s ability to turn political tailwinds into financial results.
The Düsseldorf-based defence group closed Friday at €1,190, marking a 25.7% year-to-date decline and a near-37% slide over twelve months. At a market capitalisation of €55bn, the sell-off is hardly trivial. The shares now trade more than 26% below their 200-day moving average of €1,620, while the relative strength index of 39.6 signals tension without tipping into oversold territory. Just 8.2% separates the current price from the 52-week low of €1,099.80.
The disconnect between the top-line narrative and the share price can be traced to one key metric: delivery. Although the order book swelled by 32% year-on-year, first-quarter sales of €1.94bn came in 15% below analyst estimates despite an 8% increase from the prior year. The market reacted swiftly—a 6.94% plunge on the day of the release, followed by another 6% loss after a JPMorgan downgrade the next day. Management has maintained its full-year guidance of €14.0bn to €14.5bn in revenue with an operating margin around 19%, but the burden of proof now falls on the second-half ramp. The company is “back-half loaded,” meaning investors must trust that December will deliver.
That trust is being tested by a structural shift within the group. Rheinmetall is shedding its civilian automotive exposure through the planned sale of the Power Systems unit, with closing expected in the fourth quarter of 2026. At the same time, the acquisition of Naval Vessels Lürssen has added roughly €6bn to the order book and positioned the group as prime contractor for the German Navy’s F126 frigate programme. The result: a business transforming from a diversified industrial conglomerate into a pure defence play spanning armoured vehicles, ammunition, air defence, naval systems, and now space.
Should investors sell immediately? Or is it worth buying Rheinmetall?
This week’s ILA Berlin provides the stage to test that narrative. Rheinmetall will showcase drones, loitering munitions, satellite technology and integrated air defence—weapons systems that fit its “sensor-to-shooter” philosophy. But the event is about more than product demonstrations. A separate announcement with Deutsche Telekom, outlining joint solutions to protect critical infrastructure from drone and sabotage threats, signals an attempt to broaden the investment story beyond hardware procurement and into infrastructure resilience.
The market’s patience is wearing thin, however. Rheinmetall has underperformed the STOXX Europe Total Market Aerospace & Defence Index, which has slipped just 0.7% year-to-date. The Q1 miss was company-specific, not sector-wide, and there is no imminent earnings catalyst to reset sentiment. The ILA appearance and the Telekom tie-up must convince investors that Rheinmetall is becoming a scalable, repeatable, financeable operator—not merely a beneficiary of rising defence budgets.
Looking ahead, the company expects roughly €20bn in new contract nominations during the second quarter, including a Lynx programme in Romania, a main battle tank project in Italy, and the F126 frigate deal. For the second half, opportunities total around €60bn. NATO Secretary-General Mark Rutte has urged companies like Rheinmetall to expand production capacity ahead of government orders, a signal that the structural demand is both real and urgent.
For now, the stock remains a politically charged growth equity with annualised volatility near 52%. The ILA is not just another trade fair—it is the forum where the investment narrative must grow bigger than the downward trend. Whether the market buys the story will depend on the same question that has haunted the stock for months: can Rheinmetall turn its €73bn book into cash, on time and at margin?
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