Rheinmetall’s Expanding Order Book Fails to Offset the Blow from a Cancelled Frigate Program

The defence-sector euphoria that lifted Rheinmetall to a record high of €1,995 last September has evaporated, and the Düsseldorf-based group is now battling a deepening disconnect between its operational momentum and the market’s souring mood. A string of fresh contracts—from ship protection systems for Kuwait to a joint venture in Croatia and a laser-weapon deal for the German navy—has done little to arrest a slide that has shaved nearly half the company’s market value over the past twelve months.

Among the flurry of announcements, the most notable is a first-time order from Kuwait’s naval forces for the MASS decoy-launching system, covering eight vessels and associated ammunition in a mid-double-digit million-euro deal. Days earlier, Rheinmetall unveiled a Croatian joint venture, Rheinmetall Unmanned Vehicles d.o.o., with local specialist DOK-ING, aiming to turn the Balkan country into a European hub for unmanned ground platforms. The week also brought a letter of intent with Lockheed Martin to co-produce ATACMS guided missiles in Europe, and a high-energy laser-weapon contract for the German navy worth a mid-triple-digit million-euro sum, with operational capability targeted by 2029.

Yet the market has paid little attention to these wins. The stock closed Friday at €993.00, down 1.9% on the day and 9.48% lower on the week. Over the past month the decline has reached nearly 17%, while year-to-date losses stand at 38%. Compared with twelve months ago, the shares are off 46.25%. The overriding drag remains the German government’s cancellation of the F126 frigate programme, a €20 billion project that Rheinmetall had counted on to anchor its naval expansion. Berlin instead opted for smaller Meko A-200 vessels from rival TKMS, forcing Rheinmetall to scrap around 1,000 planned jobs and shelve its naval ambitions.

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

Analysts have responded by paring back their enthusiasm. MWB Research downgraded the stock to ‘Hold’ from ‘Buy’ in the wake of the F126 decision, and Goldman Sachs has raised questions about whether Rheinmetall can efficiently execute its remaining order backlog—now estimated at more than €70 billion. Many observers see delivery capacity, not demand, as the real bottleneck weighing on investor confidence. The direct revenue impact of the lost frigate contract is relatively modest at up to €300 million this year against a projected group turnover of roughly €14.2 billion, but the signal it sent about political risk and competitive positioning has proved far more damaging.

Chart technicians note the shares are now trading about 50% below the 52-week high and only 10% above the year’s trough of €902.50 touched in late June. The 50-day moving average sits at €1,168.88—15% above the current price—while the 200-day average is a full 34.6% higher. The relative strength index at 37.2 is edging towards oversold territory but has not yet triggered a classic reversal signal. With annualised volatility at nearly 69%, the market is clearly pricing in a high degree of uncertainty.

All eyes now turn to Rheinmetall’s second-quarter earnings, scheduled for 6 August. Investors will be looking for concrete plans to fill the void left by the F126 programme, with the ATACMS partnership, the marine laser contract and the Croatian venture all expected to feature prominently in management’s growth narrative. The question is whether any combination of new orders can rebuild the credibility that the cancellation has eroded—or whether the stock’s slide has further to run before the market is convinced that the pipeline truly outweighs the setback.

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