Rheinmetall’s €350 Million Powder Plant Groundbreaking: Artillery Ambition Meets a Stock Still Down Nearly 50% From Its Peak

Rheinmetall shares recover 9% in 30 days but remain 48% below highs, as €350M powder plant expansion offsets F126 frigate contract loss and analyst downgrades.

Rheinmetall’s shares clawed back above the psychologically important €1,000 mark on Friday, closing at €1,032.60 — a 1.29% gain that capped a week of mixed signals for the Düsseldorf-based defence group. The stock has now recovered roughly 9% over the past 30 days, yet remains a staggering 48.55% below its 52-week high of €2,007.00, set on 3 October last year.

The modest rebound unfolded against a dense backdrop of corporate activity. On Wednesday, the company laid the cornerstone for “Firepower,” a €350 million expansion of its powder plant in Aschau am Inn, Bavaria. The project aims to double capacity to more than one million propellant charge modules annually by 2028 — one of the largest single investments in the current European rearmament cycle. The timeline underscores the long-term nature of Rheinmetall’s bet on sustained artillery demand, even as near-term market sentiment remains fragile.

That fragility stems in part from a major setback in the naval segment. Earlier this month, the German defence ministry awarded the multibillion-euro contract for six F126 frigates to rival ThyssenKrupp Marine Systems, leaving Rheinmetall empty-handed. The news triggered an 18.7% single-day plunge in June, and the technical damage lingers: the stock currently trades about 7.56% below its 50-day moving average and more than 30% under its 200-day average. The failed bid also scuppered parallel negotiations: talks for ThyssenKrupp Marine Systems to acquire the German Naval Yards Kiel shipyard were officially terminated this week after no agreement on economic terms could be reached — Rheinmetall had been involved as a co-bidder.

The operational picture, however, tells a different story. Rheinmetall’s order books continue to swell. The company’s Electronics division placed an order with Thales for a mid-four-digit number of next-generation optronic sighting systems, with deliveries starting in 2027. Separately, the Federal Office of Bundeswehr Equipment, Information Technology and In-Service Support called off hardware and support services worth around €100 million from an existing framework agreement on digitising land-based operations. More significantly, Rheinmetall’s share of the “Omnia Training” consortium, led by Raytheon UK, amounts to nearly €1 billion for digitising the British Army’s combat training over a 15-year period.

In production news, the new plant in Unterlüß, Lower Saxony, has delivered its first low five-digit batch of 155mm artillery ammunition to Ukraine. The company also assumed overall responsibility for the “InterRoC VII” research project, which focuses on automating military logistics convoys, on behalf of the Bundeswehr procurement office.

Yet even as factories ramp up, analysts are tempering expectations. On 20 July, Bank of America’s Benjamin Heelan cut his price target on Rheinmetall from €1,770 to €1,300, though he maintained a “Buy” rating. Heelan cited a structural shift in warfare toward drones and precision-guided munitions, arguing that the shift alters valuation models for traditional defence contractors. The downgrade highlights a tension at the heart of Rheinmetall’s strategy: the company is pouring hundreds of millions into expanding artillery propellant capacity at a time when some analysts question whether the long-term demand for conventional munitions will justify the investment.

Investors will get their next major data point on 6 August, when Rheinmetall publishes its second-quarter and first-half 2026 financial report. The results will offer the clearest view yet of whether the torrent of new orders and capital projects is translating into tangible earnings growth — or whether the market’s scepticism about the artillery business model has further room to run.