Rheinmetall's Dual-Use Tech and Defense Orders Face a Skeptical Market

Despite securing major defense contracts and showcasing advanced dual-use technologies, Rheinmetall's share price continues to struggle. The stock, trading around €1,428, has lost roughly 11% since the start of the year and sits approximately 15% below its 200-day moving average. This disconnect between operational momentum and market performance frames the current challenge for the Düsseldorf-based defense group.

The company recently bolstered its order books with a significant framework agreement with the German armed forces, the Bundeswehr. The contract covers FV-014 loitering munition systems, with a total potential volume in the billions of euros. An initial call-off worth about €300 million is set to be booked before the end of this month. These so-called kamikaze drones, produced entirely within the European Union, can loiter for over an hour before striking with a four-kilogram warhead. Official qualification is scheduled to begin in the second quarter, with first deliveries to troops planned for the first half of 2027.

Simultaneously, Rheinmetall is expanding its maritime footprint. At the Hamburg-Steinwerder site, the joint venture Rheinmetall Kraken has launched series production of unmanned surface vehicles, focusing on the K3 Scout model. Initial annual production capacity at the Blohm+Voss facility is set at 200 units, with plans to quintuple that figure in the future, responding to rapidly growing global demand for autonomous naval systems.

Should investors sell immediately? Or is it worth buying Rheinmetall?

Beyond traditional defense, the group is aggressively promoting its crossover technologies. At the Hannover Messe, Rheinmetall demonstrated live teleoperation, with an operator in Hannover controlling vehicles physically located in Düsseldorf. This technology is designed for situations where fully autonomous systems reach their limits. The company, alongside partner MIRA, is developing a universal control platform to manage fleets on road, rail, or water via a high-security cloud infrastructure, targeting logistics and public transport.

Its industrial robotics arm was also on display. The "YARO Cobot" from subsidiary YardStick Robotics is built for harsh environments, taking over monotonous or dangerous tasks. As part of the "RoX" research project, Rheinmetall is integrating simple learning algorithms so robots can independently capture and optimize movement sequences using artificial intelligence. The company's presence at the trade fair was notable as Hannover Messe, for the first time, dedicated a specific area—the "Defense Production Parc"—to the defense industry, highlighting the blurring lines between civilian and military technology.

Financially, the recent contract wins support management's targets for the current year, which include sales of around €14 billion and an operating margin of approximately 19%. Shareholders also have a tangible reward on the horizon. The board has proposed a dividend of €11.50 per share, a substantial increase from the previous year's payout. If approved at the Annual General Meeting on May 12, this would mark the fourth consecutive hike.

Investor attention now turns to upcoming catalysts. Rheinmetall will report first-quarter results on May 7, followed by the AGM five days later. The agenda for the shareholder meeting includes not only the drone contracts and the dividend vote but also discussions on a planned joint venture for missile technology. These events will test whether concrete financials and strategic updates can finally bridge the gap with the stock's weak chart performance.

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