Rheinmetall’s €73 Billion Order Book Fails to Arrest Sell-Off as Auto Rivals Circle and Delivery Gaps Bite

Rheinmetall shares near 52-week low despite €73 billion order backlog as auto giants enter defense, Q1 revenue misses estimates, and analysts split on recovery.

The numbers tell two starkly different stories. On Friday, Rheinmetall shares closed at €1,123.80, leaving them nearly 30% lower since January and brushing against the 52-week trough of €1,118.00 set on 13 May. Yet the Düsseldorf-based defense group boasts an order backlog of €73 billion that could swell to around €135 billion by the end of 2026. That chasm between operational heft and market sentiment is testing even the most loyal shareholders.

Adding to the pressure, Europe’s automotive giants are quietly muscling into the defense arena. Mercedes-Benz chief Ola Källenius told the Wall Street Journal on 16 May that his company would consider producing military goods if it made economic sense. Volkswagen is further along, with reports from 15 May pointing to a potential joint venture with Rafael to convert its Osnabrück plant for components of the Iron Dome missile defense system. For Rheinmetall, the incursion cuts both ways: new competitors could also become partners. The group is already scouting former auto-supplier sites in Neuss and Berlin to expand its own production footprint, underscoring the industry-wide bottleneck — not in demand, but in industrial capacity and speed.

That execution challenge is precisely what has unsettled analysts. First-quarter revenue of €1.94 billion fell well short of the €2.3 billion the market had penciled in, even as operating profit rose 17% to €224 million. Berenberg stuck with its "buy" rating but slashed its price target to €1,750, while JPMorgan holds "neutral" with a €1,500 target. The more bullish voices — Goldman Sachs, Jefferies and UBS — see fair value between €2,200 and €2,300, and Deutsche Bank sets its target at €2,100. The bulls argue the sell-off is a technical correction, noting the stock has still surged more than 1,200% over five years. Analysts at Tikehau Capital forecast European defense firms will deliver earnings growth three times that of their US counterparts between 2024 and 2027, driven by the push for continental defense autonomy.

Technically, the warning lights are flashing. The share price now sits 32% below its 200-day moving average, while the relative strength index at 91.3 signals extreme selling pressure. Last week alone the stock dropped 6.9%. The immediate floor is the 1,118 mark; a decisive break below that level would leave the stock without any chart-based support.

Beyond the trading screens, Rheinmetall is racing to turn its mountainous backlog into cash flows. A joint project with Deutsche Telekom aims to develop drone-defense shields for urban areas and critical infrastructure. In Neuss, serial production of the FV-014 kamikaze drone is underway, backed by a €300 million Bundeswehr contract. The group is also exploring facilities from the automotive supply chain to accelerate output. The question hanging over the stock is not whether the orders will come — they already have — but how quickly the company can translate them into revenue and margin. Until that answer becomes clearer, the market is likely to keep punishing the shares for the gap between promise and delivery.