Rheinmetall’s €350 Million Powder Bet: Artillery Expansion in Bavaria Meets a Stock Still Reeling From the F126 Blow
Published on 07/25/2026 at 12:51 | Redaktion boerse-global.de
Rheinmetall’s share price has clawed back some ground in recent days, closing Friday at €1,032.60 — a gain of 1.29% on the day and a weekly advance of 5.34%. Yet the defence group remains a long way from its 52-week high of €2,007.00, set on 3 October, with the stock still trading 48.55% below that peak. The partial recovery from late June’s lows offers some relief, but the broader picture is one of a stock that has been battered by a mix of geopolitical headwinds and a high-profile contract loss.
The most tangible reason for optimism came midweek, when the company laid the cornerstone for a major expansion of its propellant powder plant in Aschau am Inn, Bavaria. The ceremony drew senior political figures including Bavarian premier Markus Söder, state secretary Schmid and economy minister Hubert Aiwanger — a sign of the project’s strategic importance. Rheinmetall is pouring €350 million into the site, aiming to boost annual propellant powder capacity from 1,700 tonnes to 4,200 tonnes and grow the workforce from around 800 to roughly 1,400 employees. By 2028, the plant is expected to produce more than one million propellant charge modules per year.
The Aschau expansion is the centrepiece of the group’s broader “Firepower” programme, a €650 million initiative to ramp up ammunition production across Europe. Rheinmetall plans to increase its total powder capacity to 20,000 tonnes by 2030, with additional sites in Switzerland and Spain contributing to that target. For investors, the investment underscores that the political push for European rearmament is translating into concrete industrial capacity — a structural tailwind that should outlast any short-term share price volatility.
But the bullish narrative around artillery and ammunition is being tested from several directions. On the geopolitical front, China has added Rheinmetall to an export control list targeting 14 European companies, in retaliation for the latest EU sanctions round against Russia-linked firms. The measure restricts the export of dual-use goods to the listed companies, though exemptions remain possible. How deeply this will cut into Rheinmetall’s supply chains is unclear, but it adds another layer of uncertainty to an already complex operating environment.
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Meanwhile, a Ukrainian military report from early July has cast a shadow over one of Rheinmetall’s flagship air defence systems, Skynex. The report described the system as “extremely unreliable” after a failure during a Russian drone attack on 1 April, citing loading malfunctions, tracking issues and hydraulic problems. Rheinmetall has pushed back, pointing to the system’s general effectiveness and the possibility of operator error. The criticism has not yet hurt the order book: the group recently secured a contract worth several hundred million euros for four additional Skynex systems, to be delivered within 39 months.
Perhaps the most damaging blow came from a different quarter entirely. In early July, Germany’s defence ministry awarded the multi-billion-euro contract for six F126 frigates to rival ThyssenKrupp Marine Systems, leaving Rheinmetall empty-handed. The news triggered an 18.7% single-day share price drop in June, and the scars remain visible in the technical charts. The stock now trades about 7.56% below its 50-day moving average and more than 30% below its 200-day average — a sign that the market has not yet fully digested the setback in the naval segment.
The F126 disappointment has also given ammunition to analysts who question whether the traditional artillery business faces longer-term headwinds. On 20 July, Bank of America’s Benjamin Heelan cut his price target on Rheinmetall from €1,770 to €1,300, while maintaining a “Buy” rating. He argued that a structural shift in warfare toward drones and precision weapons is putting pressure on the conventional ammunition business — even as the company pours hundreds of millions into expanding exactly that capacity.
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Despite the mixed signals, the analyst consensus remains broadly positive. Jefferies reaffirmed a “Buy” rating with a €1,300 target on 9 July, and among the wider analyst community, 11 rate the stock a “Buy” against five “Sells”, with an average price target of €1,800. The recent recovery from late June’s lows, combined with the visible progress on the Aschau expansion, should support that view — even if the Chinese export controls and the debate over Skynex reliability keep near-term sentiment fragile.
All eyes now turn to 6 August, when Rheinmetall is due to publish its second-quarter and first-half 2026 results. Investors will be watching closely to see how the order book in the ammunition business has evolved, caught between a multi-million-euro capacity build-out in Bavaria and the growing chorus of analyst scepticism about the long-term demand for conventional artillery.
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