Peace Talks and a Q1 Miss: Rheinmetall Takes Its €73 Billion Story to ILA Berlin — But Can It Convert?

The ILA Berlin air show, running from June 10 to 14, offers Rheinmetall a prime platform to showcase its transformation into a pure-play defence heavyweight. With an exhibition area of around 840 square metres and a lineup that includes Boeing’s MQ-28 Ghost Bat autonomous combat aircraft, the Loitering Munition System FV-014, and the Skyranger 30 air-defence system, the message is clear: this is a company that has moved decisively beyond its automotive roots. Yet for all the hardware on display, the market remains unconvinced.

The dissonance between the group’s operational narrative and its share price is striking. Rheinmetall closed last week at €1,190.00, leaving it 40.35% below its 52-week high of €1,995.00 and just 8.2% above the year’s low of €1,099.80 touched on May 13. Since the start of 2026, the stock has shed 25.7% of its value. The technical picture is equally unkind: the shares trade 11.5% below the 50-day moving average of €1,344.32 and more than 26% beneath the 200-day average at €1,620.26. The relative strength index sits at 39.6 — oversold, but not screaming reversal.

That caution is rooted in the first quarter. Rheinmetall delivered revenue of €1.94 billion in Q1 2026, an 8% increase year-on-year, but the figure fell short of market expectations. Management attributed the miss to a strategic shift of deliveries into the second quarter, citing expected truck handovers in Germany and the restart of production at a Spanish munitions plant. The group reaffirmed its full-year guidance: revenue of €14.0 billion to €14.5 billion, an operating margin of roughly 19%, and an order backlog that stood at €73 billion as of March 31 — equivalent to about five times planned 2026 sales.

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

That backlog, up from €56 billion a year earlier, is the headline number that underpins the bull case. Within it, the air defence segment alone carried a book of €3.141 billion, 32% higher than in the prior year, after first-quarter segment revenue surged 43% to €192 million. But the sheer size of the backlog also raises questions about execution. Converting political commitment and signed contracts into factory output will determine whether Rheinmetall can translate this year’s projections into real earnings momentum.

Geopolitics adds another layer of complexity. Progress in Ukraine peace negotiations — US President Donald Trump and Ukrainian President Volodymyr Zelenskyy have said they are “significantly closer” to a deal — has weighed on defence stocks. Rheinmetall has been a prime beneficiary of Europe’s rearmament push, and any market repricing of near-term escalation risk cuts directly into the premium the shares have enjoyed. A European Central Bank rate decision on June 11 further complicates the picture, as higher capital costs directly affect valuation for capital-intensive defence companies.

The longer-term demand backdrop remains robust. SIPRI recently estimated Europe’s military expenditure at $864 billion, a record for the continent. Germany alone plans to spend over €108 billion on defence in 2026 and aims to hit NATO’s 3.5% of GDP target earlier than required. Rheinmetall’s positioning in space-based surveillance — via the Rheinmetall ICEYE Space Solutions joint venture, which recently secured a billion-euro Bundeswehr contract for SAR satellite reconnaissance — and its rapid F-35 production buildout in Weeze, completed in under 18 months, underline the breadth of its capabilities.

Yet the market wants proof that the order book flows into the income statement without further delay. The coverage ratio for this year’s expected revenue stands at roughly 97%, giving a high degree of visibility. But the Q1 hiccup lingers. The next hard data point arrives on August 6, when the half-year results are due. Until then, the ILA becomes the stage for the narrative — and the €1,099.80 support level the line in the sand for the stock.

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