Rheinmetall's €350M Civilian Divorce Is Done — The Stock Still Has to Win Over a Skeptical Market

The ink is dry on a deal that severs Rheinmetall's last civilian ties. The sale of its Power Systems division to buyout firm AEQUITA for €350 million in equity value closes a chapter in the company's transformation into a pure-play defence contractor. Yet the share price, languishing at €1,190.00, shows little enthusiasm for the milestone. That gap between strategic progress and market sentiment will be on full display next week when the group unveils its new corporate structure at the ILA Berlin airshow.

The transaction, subject to regulatory approval, is expected to close in the fourth quarter of 2026. Rheinmetall has already written down roughly €350 million on the business in prior periods, and a further non-cash impairment of about €200 million will follow. With the automotive chapter behind it, the company now commands an order book worth €73 billion — roughly five times the revenue it expects to generate this year.

ILA Berlin (10–14 June) offers the stage for Rheinmetall to recast its narrative. Over 840 square metres of exhibition space, the group will present a suite of next-generation capabilities that stretch far beyond its traditional land-systems roots. Among the exhibits are the Loitering Munition FV-014, already under a framework contract with the Bundeswehr, and the Skyranger 30 air defence system. Also on show will be Boeing's autonomous Collaborative Combat Aircraft MQ-28 Ghost Bat, a sign of Rheinmetall's deepening ties in air power. The group’s space ambitions are equally prominent: its joint venture with ICEYE recently secured a billion-euro Bundeswehr contract for space-based reconnaissance via SAR satellites, while the F-35 production facility in Weeze has been built in less than 18 months and stands as one of Europe's most modern military aircraft plants.

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

The operational picture is robust, but the stock tells a different story. At Friday’s close, Rheinmetall shares had shed 25.69% since the start of 2026 and stood nearly 36% below their level 12 months ago. The current price is 40.35% below the 52-week high of €1,995.00 and just 8.2% above the low of €1,099.80 recorded on 13 May. The 200-day moving average sits at €1,620.26, meaning the stock is more than 26% below that technical benchmark. The 50-day average at €1,344.32 is also out of reach, and the relative strength index of 39.6, while approaching oversold territory, has not yet confirmed a reversal.

Market unease goes beyond chart patterns. Rheinmetall’s first-quarter revenue of €1.94 billion came in at just 8% above the prior-year period and missed analysts’ expectations. The company attributed the shortfall to strategic shifts into the second quarter, including delayed truck handovers in Germany and the restart of a Spanish munitions plant. Management has reaffirmed its full-year guidance for revenue of €14.0 to €14.5 billion and an operating margin of around 19%. Order coverage for 2026 stands at roughly 97% of projected sales — a high level, but one that still requires flawless execution across factories and supply chains.

Geopolitical factors add another layer of pressure. Recent signs of progress in Ukraine peace talks have weighed on defence stocks, and Rheinmetall is particularly sensitive to any reassessment of the “escalation premium” built into its valuation over the past two years. Still, longer-term demand drivers remain intact: SIPRI estimates European military spending at $864 billion, the highest ever recorded for the continent, and Germany has budgeted over €108 billion for defence in 2026, with a stated aim of reaching NATO’s 3.5% of GDP target earlier than required.

For now, the ILA Berlin provides Rheinmetall with a high-profile opportunity to bridge the gap between its industrial breadth and its battered share price. The next hard check on that narrative will come on 6 August with half-year earnings. By then, the market will want to see that the first-quarter hiccups were indeed temporary and that the record-order backlog is translating into real cash flow and margin expansion. Until those numbers land, the company’s biggest showcase of the year can only set the stage — the stock must still deliver the performance.

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