Rheinmetall’s Berlin Air Show Showcases a New Identity, but the Stock Is Still Searching for Altitude

The halls of the ILA Berlin 2026 are buzzing with Rheinmetall’s latest hardware, yet the company’s share price tells a far more sobering story. While the defence group unveils a sweeping portfolio of cutting-edge systems and confirms its departure from the automotive sector, investors remain fixated on a stock that has shed roughly a quarter of its value since the start of the year.

At the heart of the exhibition is the company’s expanded role in military aviation. Rheinmetall is now manufacturing centre fuselage sections for the F-35 Lightning II at its facility in Weeze, with production having kicked off in the summer of 2025. The eighth fuselage is already on the line, and the total order from US partner Northrop Grumman calls for 400 units. Alongside this, the autonomous MQ-28 Ghost Bat – a combat drone that has logged more than 150 test flights – takes centre stage. Rheinmetall is coordinating the Bundeswehr’s planned procurement of the system, with delivery targeted for 2029.

The show also marks a definitive strategic break. Rheinmetall has agreed to sell the bulk of its automotive parts division to Munich-based industrial holding Aequita for €350 million, with completion expected in the fourth quarter. Around 6,200 employees will move to the buyer, leaving the group with 34,000 staff focused almost entirely on defence. The divestment comes as the automotive unit struggled with tepid demand from European carmakers, while the defence side was growing too fast to keep the business under the same roof.

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

Rheinmetall’s pivot to a pure-play defence supplier is reinforced by a string of recent awards. One contract from the Bundeswehr is valued at €1.01 billion. The group’s joint venture with ICEYE, Rheinmetall ICEYE Space Solutions, secured a separate billion-euro deal for space-based reconnaissance using SAR satellites – a technology showcased at the ILA. The company also highlighted its loitering munition FV-014, capable of circling a target area for up to 70 minutes, and the Skyranger-30 air-defence turret.

Yet for all the operational momentum, the market remains unconvinced. Rheinmetall shares closed at €1,203.20 on Tuesday, a decline of nearly 25% year-to-date and roughly 40% below the September 2025 record high of €1,995. The 200-day moving average stands at €1,614.28, a level that now looks distant. Volatility is elevated, with an annual swing of around 52%.

Analysts, however, are sticking with their bullish calls. Of 21 covering the stock, 18 rate it a buy and three a hold, with a median price target of €1,889 – a chunky premium to the current level. The disconnect stems partly from first-quarter 2026 results, which showed revenue of €1.94 billion, up 8% from a year earlier but about 15% short of analyst estimates. Management attributed the shortfall to the typical weighting of production ramp-ups and contract deliveries toward the second half, and reaffirmed the full-year guidance range of €14 billion to €14.5 billion.

The ILA provides a powerful stage for Rheinmetall to demonstrate it is no longer just a supplier of components but an integrator of complex defence systems. Translating that capability into a sustained earnings upgrade – and a rising share price – will require converting the exhibition-floor buzz into binding serial orders. Until then, the stock remains caught in a downward trend that no amount of hardware on display can break on its own.

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