Rheinmetall's €1 Billion Bundeswehr Order Can't Mask the Stock's 26% Year-to-Date Plunge

Rheinmetall secures €1.015B German military truck contract but shares drop 26% YTD as investors worry about production bottlenecks and margin pressure despite record €73B backlog.

The Düsseldorf-based defense group announced a €1.015 billion contract from the German military for more than 2,000 HX-series transport trucks, the fourth tranche of a framework deal covering up to 6,500 vehicles. Shares initially jumped over 4% on the news, briefly crossing its 20-day moving average. But the rally proved fleeting. The stock now trades at €1,184.60, down 1.95% on the session and off 26% since the start of the year — more than 40% below the 52-week high of €1,995 hit during the post-Ukraine invasion euphoria.

The order itself underscores the deepening ties between Rheinmetall and the Bundeswehr. The new vehicles — roughly 1,000 each of the 8x8, 4x4 and 6x6 unarmoured transport variants — are produced by Rheinmetall MAN Military Vehicles and serve as the logistical backbone of the German armed forces. Deliveries begin this half-year, with the bulk scheduled for 2026. With over 3,500 units now called off against the framework contract, nearly half the total volume is already locked in, leaving room for further tranches.

Yet the operational picture remains remarkably strong. Rheinmetall's order backlog hit a record €73 billion at the end of March. In the first quarter of 2026, the company posted profitable growth and reaffirmed its full-year revenue forecast of 40% to 45% expansion. The acquisition of Naval Vessels Lürssen added maritime capabilities to a portfolio already reshaped by the sale of civilian businesses such as Power Systems. The focus now rests squarely on vehicles, weapons, ammunition and electronics — a bet that is paying off in terms of demand.

That demand is being driven by a structural shift in European defence. The Ukraine war exposed the continent's reliance on the US, and political debates about a potential withdrawal of American troops have only intensified the push toward self-reliance. Rheinmetall is at the centre of this trend, with products ranging from the Barracuda cruise missile to the Fury combat drone. Autonomous systems are a particular growth area.

Why, then, is the stock bleeding value? The market is pricing in the execution risk that comes with scaling up at breakneck speed. Production bottlenecks, stretched supply chains and rising raw material costs are squeezing margins. The annualised 30-day volatility stands at 53% — a clear signal that investors are bracing for turbulence. The initial euphoria has given way to a cold-eyed assessment of whether Rheinmetall can actually turn its enormous backlog into profitable output.

The route back to the all-time high of around €2,000 depends almost entirely on the company's ability to deliver on its contracts without margin erosion. As long as production constraints dominate, the shares will remain vulnerable to setbacks — even with the best order book in the industry. The gap between record business and a falling share price is the central puzzle that investors are now watching.