Billion-Euro Drone Deal Can't Lift Rheinmetall as Romanian Contract Deadline Looms

Rheinmetall's shares hit a 52-week low amid a bitter €5.7B contract dispute with Romania, even as the defense giant boasts a record €73B backlog and new drone orders.

Rheinmetall is flexing its muscles with a string of major new orders, a record €73 billion backlog, and ambitious production expansions. But on the trading floor, the stock has sunk to a 52-week low, weighed down by a bitter contract dispute in Romania that threatens to derail a €5.7 billion program — and the clock is ticking.

The Bundeswehr this week signed a framework agreement for the FV-014 loitering munition system, with the first call-off worth roughly €300 million and deliveries scheduled to begin in 2027. The total contract is in the billions. Rheinmetall will manufacture the Kamikaze drone at its Neuss plant, adding to existing capacity in Braunschweig. The FV-014 combines surveillance with strike capability, offering a 100-kilometer range and 70-minute flight time, and crucially, all components are produced within the EU — a selling point that resonates in Berlin's current procurement debates. Separately, the group announced a cooperation with Deutsche Telekom to develop a drone shield for protecting cities and critical infrastructure.

But the same week that brought these headlines also saw Rheinmetall's shares touch their lowest level in 52 weeks at €1,118, before closing Thursday at around €1,147. Year to date, the stock has shed roughly 28% of its value. The ex-dividend date for a record payout of €11.50 per share arrived this Friday, adding technical pressure. Even after the modest recovery, the equity trades about 30% below its 200-day moving average, while its relative strength index (RSI) hovers above 90, a level that technically signals overbought conditions and often precedes a bounce.

The fundamental drag on the stock is indisputably the standoff in Bucharest. Under the SAFE program, worth €5.7 billion, Rheinmetall is demanding renegotiated terms by May 31, specifically seeking to lower the local production quota originally agreed upon. Romanian Defence Minister Radu Miru?? has rejected the request outright, pointing to already hefty price increases on armoured vehicles and patrol ships. His ministry is now exploring the possibility of redirecting the funds toward joint EU procurement projects instead. Failure to reach a deal would severely disrupt Rheinmetall's otherwise smooth expansion along NATO's eastern flank, just as the group promotes its Lynx KF41 infantry fighting vehicle — Romania is considering an order for 298 units, complete with local technology transfer — at the BSDA 2026 defence fair in Bucharest.

None of this diminishes the sheer scale of the group's order book. The backlog, including the recently acquired Lürssen naval division, stood at a record €73 billion at the last count. Rheinmetall posted first-quarter 2026 revenue of €1.9 billion and an operating margin of 11.6%, even though earnings per share missed analyst estimates. Management maintained its full-year guidance of €14 billion to €14.5 billion in revenue. Chief Executive Armin Papperger has flagged a much stronger second quarter, driven by large naval and vehicle orders.

On the production side, the ramp-up continues at full throttle. Annual capacity for 155-millimetre artillery shells is on track to hit 1.1 million units by 2027 and 1.5 million by 2030, a dramatic expansion of the current base. The Q2 delivery volumes will be key to proving that the company can convert its bulging pipeline into cash flow — and to convincing investors that the share price has reached a floor.