Rheinmetall’s €5.7bn Romanian Prize and Ghost Bat Reveal Fail to Lift the Shares as Q1 Revenue Miss Lingers

Rheinmetall's stock near 12-month lows despite €5.7B order and Ghost Bat drone, as Q1 earnings miss and weak technicals weigh.

Barrel-chested deals and a new aerial flagship are not enough to repair the damage from a first-quarter earnings shortfall. Rheinmetall heads into this week’s ILA Berlin air show with a €5.7 billion Romanian order, a freshly signed disposal of its civilian Power Systems unit, and a starring role for the MQ-28 Ghost Bat combat drone — yet its stock continues to trade near the lows of the past 12 months. The disconnect between operational momentum and market perception has rarely been starker.

The Romanian contract is among the largest single awards in Rheinmetall’s history. It covers Lynx infantry fighting vehicles, Skyranger air?defence systems, munitions and maritime equipment, deepening the group’s footprint on NATO’s eastern flank. The deal was secured in the second quarter and forms part of the roughly €20 billion in nominations CEO Armin Papperger flagged during the earnings call for the period. For the full year, the pipeline includes opportunities of around €60 billion, led by the Arminius programme and Ukrainian procurement.

On the corporate side, Rheinmetall has signed a purchase agreement with Munich?based AEQUITA for the sale of its Power Systems division. The preliminary enterprise value for the entire unit is €350 million, with closing expected in the fourth quarter of 2026, subject to regulatory approvals. The division had already been classified as a discontinued operation, and the group anticipates a further non?cash impairment of roughly €200 million in 2026. The move clears the path for a pure?play defence and security focus — a strategic shift that has been in the works for some time.

None of this has swayed the share price. The stock closed at €1,193.60 on the day of the Romanian announcement, down 0.45%, and has lost 25.47% since the start of the year. That decline has a clear trigger: first?quarter revenue of €1.94 billion, up 8% year?on?year but about 15% short of the analyst consensus. Management blamed the ramp?up schedule, saying the bulk of production and contract deliveries are weighted toward the second half. The market punished the miss heavily on 1 June, slicing more than 6% off the share price in a single session.

Technically, the picture remains strained. The stock sits well below its 50?day moving average of €1,355.63, while the relative strength index of 39.8 suggests there is room before oversold territory. JPMorgan trimmed its price target to €1,500 in May, a far cry from the median analyst target of €1,889 compiled from 21 houses. The wide dispersion — the highest and lowest targets differ by more than €1,090 — underscores the uncertainty around the pace at which the record order backlog of roughly €73 billion will translate into reported earnings.

At the ILA Berlin, running from 10 to 14 June, Rheinmetall will occupy an 840?square?metre stand designed to advertise its transformation from a land?systems specialist into a multi?domain defence player. The centrepiece is the MQ?28 Ghost Bat, a stealthy combat drone developed by Boeing in Australia. Rheinmetall is lined up as the prime contractor for a potential German procurement, with integration, national adaptation, maintenance and logistics falling under its remit. A Bundeswehr decision is expected in 2029, but the competition is stiff: Airbus and Kratos are pushing a Europeanised version of the XQ?58A Valkyrie.

Alongside the Ghost Bat, the group will showcase its ICEYE Space Solutions joint venture, which recently secured a billion?euro Bundeswehr contract for satellite?based reconnaissance; the FV?014 loitering munition with a range of up to 100 km; the Skyranger 30 air?defence system; and the Caracal air?assault vehicle. The breadth of the portfolio is meant to underline that the order pipeline is not an accident of the Ukraine war but the result of a deliberate industrial build?out.

For now, the market is taking a wait?and?see stance. The full?year revenue guidance of €14?14.5 billion implies growth of up to 45%, and the second?half weighting means that the next few months will be decisive. If the €20 billion in second?quarter nominations materialise as expected, and the €60 billion opportunity pipeline begins to convert, the gap between the current share price and the median analyst target could start to close. Until then, the Ghost Bat on the ILA floor remains a promise — impressive, but unfulfilled.