Rheinmetall’s Strategic Pivot to All-Defense Gets a Drone Boost, but the Stock Remains Grounded

Rheinmetall is putting on a convincing show at the ILA Berlin air show this week, but the stock market is still waiting for the hard numbers to back up the narrative. The Düsseldorf-based defence group has used the event to unveil a series of high-tech alliances and production milestones, yet its shares remain deep in the red for the year.

The centrepiece of the company’s exhibition is the MQ-28 Ghost Bat, an autonomous combat drone developed by Boeing. Rheinmetall has struck a strategic partnership with the US aerospace giant to serve as the system manager for any German procurement, handling adaptation, maintenance and logistics. The goal is to have the platform operational with the Bundeswehr by 2029. Alongside the drone, the company is showcasing its work on the F-35 fighter jet: a new factory in Weeze has already produced the eighth centre fuselage section, with a total of 400 such elements to be built for Northrop Grumman.

The ILA display also features SAR satellites from subsidiary ICEYE and the Skyranger 30 air defence system, as well as the FV-014 loitering munition — a drone capable of circling a target area for up to 70 minutes. The message is clear: Rheinmetall is no longer just a tank maker.

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

The timing of the air show coincides with a radical corporate restructuring. The group recently announced the sale of its civil automotive division, Power Systems, to investor AEQUITA, marking its complete exit from the car parts business. The transaction triggers a non-cash impairment charge of €200 million this year, but simplifies the company into a pure-play defence contractor. That move, combined with the air show visibility, is designed to convince investors that the future lies solely in weapons, munitions and air defence — backed by a record order backlog of €73 billion.

Yet the stock has failed to catch fire. After closing Monday at €1,204, the shares edged up to €1,217 on Tuesday, a gain of just over 1%. That still leaves the year-to-date decline at roughly 24%. The price remains nearly 9% below its 50-day moving average and trades closer to its 52-week low than to any previous highs. The relative strength index has climbed to 42, offering a modest sign that selling pressure is easing, but the broader downtrend remains intact.

The air show itself is unlikely to generate immediate revenue. The alliances and prototypes on display must first be converted into firm production orders from the Bundeswehr. If new contracts for drones or satellites emerge during the week, they could provide a catalyst. Conversely, a slip below the €1,200 threshold would open the door to a rapid test of the year’s low.

Rheinmetall’s transformation into a leaner, all-defence group is arguably complete. But the market is demanding proof that the €73 billion backlog and the high-tech positioning at ILA will translate into earnings momentum — and that may take more than a polished exhibition to deliver.

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