Rheinmetall Faces a Test of Credibility as €73bn Order Book Meets a Revenue Miss

Rheinmetall's stock hits a 52-week low despite a €73bn order book and cruise missile ambitions, as CEO Papperger seeks to reassure investors after a Q1 revenue miss and JPMorgan downgrade.

The disconnect between Rheinmetall’s operational heft and its stock market performance has rarely been starker. The Düsseldorf-based defence group heads into its virtual annual general meeting on Tuesday with a record €73bn order book, ambitious cruise missile plans, and a share price that has just hit a 52-week low. Chief executive Armin Papperger must now convince investors that the recent turbulence is a timing issue, not a structural problem.

The trigger for the sell-off was the first-quarter earnings report released on 7 May. Revenue rose 7.7 per cent year-on-year to €1.94bn, but that fell well short of the roughly €2.3bn analysts had pencilled in. Operating profit, however, told a more encouraging story, climbing 17 per cent to €224m, with the margin improving to 11.6 per cent. The company blamed the revenue shortfall on delivery delays for military trucks and production adjustments at its Spanish munitions plant in Murcia — issues it expects to resolve in the second quarter.

The market’s reaction was brutal. Shares plunged more than 10 per cent on Friday alone to close at €1,207.20, wiping out a quarter of the stock’s value since the start of the year. The sell-off was compounded by a JPMorgan downgrade on 8 May, with analyst David Perry slashing his price target from €2,130 to €1,500 and moving the stock from “Overweight” to “Neutral”. The shares now trade well below their 200-day moving average, and the technical uptrend that had been in place for months has decisively broken.

From its all-time high of €1,995 in September 2025, the stock has lost nearly 40 per cent. Yet the underlying business fundamentals remain formidable. The order backlog swelled to roughly €73bn, up from €56bn a year earlier, and for the first time includes €5.5bn from the newly created Naval Systems segment following the acquisition of the NVL Group in the first quarter. The company is sticking with its full-year guidance of 40 to 45 per cent revenue growth and an operating margin of around 19 per cent.

Papperger is expected to use the shareholder meeting to shift the narrative back to strategy. A draft of his speech, released ahead of the event, outlines plans to begin manufacturing cruise missiles for deep-strike operations at the company’s Unterlüß site in Lower Saxony before the end of the year. Rheinmetall is teaming up with Dutch defence group Destinus in a planned joint venture to market advanced rocket systems, with the Ruta 2 missile at the centre of the offering. That system can carry a 250kg payload to a range of 700 kilometres and uses artificial intelligence for target recognition.

The naval expansion is also gathering pace. With the NVL acquisition complete, Rheinmetall now covers the full maritime spectrum — from unmanned surface vehicles to frigate construction — positioning itself as a one-stop shop for all branches of the armed forces. Management expects significant momentum in order intake during the second quarter, with the volume set to exceed €20bn. Programmes for Lynx battle tanks and frigate ammunition are among the multibillion-euro contracts in the pipeline.

Analyst opinion on the stock remains divided. Banco Santander upgraded the shares to “Outperform” with a €1,735 price target, while Citi stuck with a “Hold” rating and a €1,480 target, citing political risks around defence spending. The gap between the current share price and the most bullish forecasts suggests that much hinges on whether Papperger can deliver on his second-quarter promises.

Shareholders at the virtual meeting on 12 May will vote on a proposed dividend of €11.50 per share for the 2025 financial year. The stock will trade ex-dividend on 13 May, with payment scheduled for 15 May. Between now and then, Papperger has a narrow window to restore confidence — and to prove that the delayed revenues are indeed about to land in the books.