Rheinmetall’s €300 Million Hole and a 60% Surge: The NATO Summit Will Decide Which One Matters

Rheinmetall Q2 revenue surges over 60% to €3.1B, but F126 frigate cancellation and technical resistance cap gains. NATO summit may trigger rally or profit-taking.

Second-quarter revenue at Rheinmetall is on track to jump by more than 60%, with one analyst pencilling in a 59% gain to nearly €3.1 billion. Yet the defence group’s stock remains 45% below last September’s record high of €1,995, caught between powerful operational momentum and a jolt of bad news from Berlin.

The Bundeswehr’s decision to scrap the F126 frigate project after years of delays and cost overruns will cost Rheinmetall up to €300 million in revenue this year. The cancellation also forces the company to scale back its second-quarter nomination guidance to a low-double-digit billion-euro range, well short of the €20 billion it previously flagged. Management is assessing whether the programme will hit the full-year outlook, with more clarity promised on 6 August when quarterly results are published. The group noted that the F126’s expected contribution to its 2030 medium-term target had been below 3% in any case.

The stock closed Friday at €1,097, down 0.51% on the day but still marking a 16.63% weekly gain – a vivid rebound from the 52-week low of €902.50 hit earlier this month. The recovery has been fuelled by a sector-wide rally and fresh corporate developments. Rheinmetall took a majority stake in Croatian DOK-ING on 1 July, gaining entry to the fast-growing market for unmanned ground vehicles. Meanwhile, Germany’s defence ministry is exploring licensed production of US systems such as Tomahawk and PAC-3 missiles on home soil, a move that could open another revenue stream for Rheinmetall.

All eyes now turn to the NATO summit on 7-8 July in Ankara. The market’s central question: will the gathering produce concrete procurement commitments for German sites, or merely reaffirm generic pledges to raise defence spending? A specific signal could extend the rally; hollow rhetoric would likely trigger profit-taking after last week’s sharp ascent.

Technically, the 50-day moving average at €1,197.09 looms as the first real hurdle – the stock currently sits 8.36% below it. The 200-day average at €1,538.88 is a distant 28.71% away. The relative strength index stands at 46.5, leaving room for further upside if fundamentals cooperate. But the chart remains damaged: on a 30-day view the share is still down 8.02%, and the year-to-date loss of 31.50% underscores the structural sell-off that began last autumn.

Analyst sentiment is mixed. JPMorgan has cut its earnings-per-share estimates through 2030, citing faster technological shifts in defence technology and slower-than-expected German government contract awards. The bank now views the medium-term targets as increasingly ambitious. Other analysts, however, see Rheinmetall’s order intake beating expectations even after the F126 setback, with one forecasting €8 billion in new business for the quarter.

The broader sector backdrop remains volatile. KNDS, the Franco-German tank builder, has postponed its initial public offering, with shareholders waiting for a rebound in European defence stocks before reviving the process. Rheinmetall is widely seen as the closest comparable, and the IPO’s valuation proved contentious – some investors pitched KNDS at around €12 billion, while bankers argued for €15 billion, down from talk of €20 billion just months ago. Germany’s economy ministry said it respects the decision and remains committed to co-investing with French partners.

Geopolitical tailwinds persist. Berlin plans to spend over €108 billion on external security in 2026, rising to roughly €152 billion by 2029. Latvia has signed a deal with Rheinmetall to expand ammunition production along NATO’s eastern flank. Yet not all allies are pulling in the same direction: Spain, Slovakia and the US have signalled they will not meet the alliance’s new spending targets, while France and Italy have yet to present credible plans.

If the Ankara summit delivers specific procurement decisions for German defence sites, the stock could push towards the 50-day line and beyond. If it yields only broad promises, the 30-day volatility of 69.10% suggests the shares could quickly slide back towards the €902.50 trough. The next definitive marker after the summit will be Rheinmetall’s 6 August earnings release, which should reveal how margins and the order backlog are evolving in the second half of the year.