Rheinmetall's €73bn Backlog Fails to Shield Shares From 10% Rout as Cruise Missile Plans Take Shape

Rheinmetall shares plunge 40% from peak as CEO pushes cruise missile and naval growth, but investors await faster order conversion amid €73bn backlog.

The defence group's stock has tumbled to a fresh 52-week low, wiping nearly 40% off its value since last September's peak, even as management pushes ahead with ambitious expansion into cruise missile production and naval systems.

Shares closed at €1,207.20 on Friday, shedding 10.42% in a single session. The sell-off has accelerated over the past month, with the stock losing roughly 23% in 30 trading days. Since hitting a 52-week high of €1,995.00 in September 2025, Rheinmetall has shed almost €800 per share in market value.

The brutal market reaction came despite a record order book that swelled to €73bn as of March 31, up from €56bn a year earlier. The newly consolidated Naval Systems segment contributed €5.5bn to that backlog, though first-quarter figures showed only one month of operations — €77m in revenue and €8m in operating profit, yielding a 10.1% margin.

Bernstein analyst Adrien Rabier cautioned that Rheinmetall must convert its mountainous order pipeline into revenue growth more quickly to rebuild investor confidence. The company's net debt-to-EBITDA ratio stands at a conservative 0.39x, meaning it holds more cash than debt, but that balance sheet strength has done little to stem the share price slide.

Cruise Missiles and Naval Expansion Press Ahead

CEO Armin Papperger is pushing forward with diversification plans regardless of the market turbulence. Rheinmetall intends to begin cruise missile production this year at its Unterlüß facility in Lower Saxony, partnering with Dutch firm Destinus in a joint venture. The Ruta Block 2 system, equipped with AI guidance to evade enemy air defences, can strike targets up to 700 kilometres away.

The timing is strategic. US President Donald Trump is expected to scrap planned Tomahawk missile deployments in Germany, leaving a capability gap that European manufacturers are racing to fill. Meanwhile, demand from the Middle East is surging amid the Iran conflict, and Rheinmetall plans to double its air defence systems in the region by the end of 2027 — though capacity constraints are currently limiting the pace.

In Hamburg, serial production of the Kraken K3 Scout unmanned surface vessel has begun at the Blohm+Voss shipyard. Initial annual capacity is set at roughly 200 units, with potential scalability to 1,000.

All Eyes on the AGM and a Dividend Decision

The annual general meeting takes place on Tuesday, 12 May, with the ex-dividend date set for 13 May. The two source articles differ on the proposed payout — one states €8.47 per share, the other €11.50 — but shareholders will need to hold the stock before the ex-date to receive whatever amount is approved. The payment is scheduled for 15 May.

Papperger faces a tough audience. He must explain not only the entry into naval armaments following the NVL acquisition but also convince investors that the anticipated mega-orders for loitering munitions and Lynx battle tank programmes will materialise in the second half. The first quarter disappointed despite year-on-year revenue and profit growth, as project delays and elevated expectations left the market cold.

Q2 as the Turning Point

Management is banking on a sharp acceleration in the second quarter. The weapons and ammunition division, earlier truck call-offs, and rising revenues from Digital Systems are expected to drive momentum. Order intake should surpass €20bn in Q2, fuelled by large contracts for loitering munitions and Lynx programmes.

The full-year targets remain unchanged: revenue between €14bn and €14.5bn, with an operating margin of roughly 19%. The balance sheet provides ample support — the net debt-to-EBITDA ratio of 0.39x reflects a company with more cash than borrowings.

The critical question hanging over the stock is whether the promised Q2 acceleration will be enough to close the yawning gap between operational strength and market sentiment. The second-quarter numbers are due in the summer. Until then, Rheinmetall's record order book and ambitious cruise missile plans will have to compete with the harsh reality of a share price that keeps plumbing new depths.