Rheinmetall’s €350M Civilian Exit and CEO’s €5M Bet: A Double Signal to a Skeptical Market

Armin Papperger buys shares day before selling Power Systems; stock near 52-week low despite record €73B backlog and defense showcase at ILA Berlin.

Armin Papperger has put his own money on the line. The Rheinmetall chief executive, through his ATP Holding GmbH vehicle, snapped up roughly 4,000 shares on the Xetra platform in early June at an average price of around €1,250 apiece — a total outlay of approximately €5 million. The insider purchase came just a day before the defense group announced it was exiting the civilian automotive business for good, selling its Power Systems division to the investment firm AEQUITA for €350 million.

The divestiture marks a clean break. Power Systems contributed about €2 billion in revenue last year and employed 6,250 people. AEQUITA will take on the entire workforce except for three specific units, including the Spanish plant in Abadiano. The deal, expected to close in the fourth quarter of 2026 pending regulatory approval, leaves Rheinmetall as a pure-play defense contractor focused on ammunition, armored vehicles, and military technology.

Papperger’s personal bet was well-timed to send a message, but the stock has been in a punishing slide. At around €1,192, the shares are trading near their 52-week low, down more than 25% since the start of the year and roughly 40% below the 12-month peak of €1,995. The pain intensified on June 1, when the stock shed over 6% in a single session after first-quarter revenue missed analyst expectations. Rheinmetall reported €1.94 billion in sales for the period — an 8% year-on-year increase but about 15% below consensus. Management stressed that the production ramp-up and contract deliveries are heavily weighted toward the second half.

That half-year shift in revenue timing explains much of the market’s impatience. Yet the underlying demand picture remains robust. The company’s total order backlog has reached a record €73 billion, with the continuing defense operations alone holding nearly €64 billion in contracted work — enough to keep factories running at full tilt for years. The 2026 guidance calls for revenue of €14 billion to €14.5 billion, representing growth of up to 45%, and an operating margin of around 19%.

Rheinmetall is using the ILA Berlin air show from June 10–14 to showcase the breadth of its new identity. On an 840-square-meter stand, the centerpiece is the MQ-28 Ghost Bat, a combat drone developed by Boeing in Australia. Rheinmetall is the designated prime contractor for the German variant, with a Bundeswehr procurement target set for 2029. The group is also highlighting its joint venture ICEYE Space Solutions, which recently won a billion-euro contract for space-based synthetic aperture radar reconnaissance, along with the FV-014 loitering munition (range up to 100 kilometers), the Skyranger 30 air-defense system, and the Caracal air-assault vehicle.

The Bundeswehr’s drone competition remains unresolved. Airbus and Kratos are offering a Europeanized version of the XQ-58A Valkyrie, and Defense Minister Boris Pistorius has said no decision has been taken. Both bids carry industrial-policy weight — Boeing-Rheinmetall leverages an existing partnership, while Airbus-Kratos stresses European production.

CEO Papperger laid out a concrete pipeline in the earnings call. Nominations worth roughly €20 billion are expected in the second quarter, including the Lynx infantry fighting vehicle program in Romania and a main battle tank project in Italy. For the second half, he sees opportunities amounting to around €60 billion, driven by the Arminius program and procurement for Ukraine.

Analysts, however, remain divided on how quickly that pipeline will translate into reported revenue. The median target from 21 houses sits at €1,889, but the range of estimates stretches over €1,090 — a clear sign of disagreement about the pace of execution. For the stock to climb back toward that consensus, the second half will have to deliver the surge in revenue that management has promised and the market is still waiting for.