Rheinmetall’s €2.4bn Kamikaze Drone Deal Fails to Halt the Slide as Q1 Results Loom

Rheinmetall shares fall 22% as defense budgets shift, but record €63.8B backlog and 2026 revenue targets signal strong operational momentum.

The defence giant’s share price has been on a relentless downward trajectory, shedding over 22% since late February, even as the order book swells to unprecedented levels. At €1,341.20, the stock is trading near a 52-week low, a stark contrast to the operational momentum building inside the company. The disconnect between factory-floor reality and market sentiment has rarely been wider.

A Strategic Pivot Under Pressure

The root of the selling pressure goes beyond quarterly noise. Analysts at mwb research have flagged a structural shift within Western defence budgets: spending is tilting away from traditional land systems toward missile defence, cruise missiles, and autonomous platforms. Rheinmetall’s core Weapons & Ammunition division, heavily reliant on 155mm artillery, faces potential margin compression as industry-wide capacity expansion threatens to erode pricing power.

Yet the company is not standing still. On 22 April, Rheinmetall signed a framework agreement with the German Bundeswehr for the FV-014 kamikaze drone, valued at up to €2.4 billion. The initial call-off covers roughly 2,500 units worth around €300 million, with total volumes potentially reaching five figures. Simultaneously, production of unmanned surface vessels has begun at the Blohm+Voss shipyard in Hamburg, where capacity starts at 200 drone boats per year and can scale to 1,000.

The Numbers Tell Two Stories

Operationally, the trajectory remains impressive. Management targets 2026 group revenue of €14.0 to €14.5 billion, representing 40-45% growth, with an operating margin of around 19%. Remarkably, 91% of that revenue target is already covered by existing orders. The order backlog stood at €63.8 billion at the end of 2025 and is expected to surpass €135 billion by the end of next year.

The analyst community, however, is deeply divided. Goldman Sachs maintains a buy with a €2,300 price target, while UBS sees fair value at €2,500. At the more cautious end, Warburg Research rates the stock a hold at €1,740, and mwb research recently trimmed its target from €1,500 to €1,450, keeping a hold rating. The rationale from mwb is blunt: the current valuation leaves no room for disappointment.

Catalysts on the Horizon

All eyes are now on 7 May, when Rheinmetall releases its first-quarter results. The consensus calls for revenue of €14.7 billion — slightly above the company’s own guidance — and earnings per share of €39.61, a 166% jump from 2025. The Q1 report will test whether the growth narrative can support a stock that has already priced in considerable optimism.

Five days later, on 12 May, the annual general meeting will vote on a dividend of €11.50 per share, up from €8.10 last year. The company has also announced a joint venture with Destinus, named Rheinmetall Destinus Strike Systems, focused on missile production. Rheinmetall is expected to hold a 51% stake, with the venture’s launch pencilled in for the second half of 2026, subject to regulatory approvals.

Technicals Offer Little Comfort

Chart watchers see the next support level around €1,267. A daily close above the €1,380-€1,410 zone could brighten the near-term picture and open a path toward €1,464. But as long as the 20-day moving average near €1,461 remains uncrossed to the upside, the downtrend stays intact. The Q1 numbers will need to deliver more than just strong headlines to change that.