Rheinmetall's Ammo Plants Ramp Up, But the Stock's 51% Rout Tells a Different Story About Defense's Future

German defense giant delivers 155mm artillery to Ukraine amid massive output ramp-up, but shares sink as NATO shifts focus from heavy armor to drones and air defense.

The first batch of artillery shells from Rheinmetall's new plant in Unterlüß is now en route to Ukraine, marking a milestone in the German defence group's capacity expansion. Yet the equity market is paying little attention. On Tuesday, shares closed at €977.90, leaving them 51% below the record high of €1,995.00 set in September 2025 — and 39% lower for the year to date.

The delivery consists of 155mm RH1412 projectiles, the newest type in Rheinmetall's artillery portfolio, alongside propellant charges sourced from across its production network. The volume runs to a low five-figure count. More than half of the order has already been shipped, with the remainder scheduled for delivery by the end of 2026. The munitions are compatible with a wide array of 155mm weapon systems and offer extended range.

Underlying the shipment is a massive manufacturing build-out that began in 2022, driven by surging demand for ammunition linked to Western support for Ukraine. Rheinmetall's target is to produce roughly 1.5 million 155mm shells annually by 2030 — a tenfold increase that would both sustain Kyiv's supplies and replenish NATO stockpiles.

The irony is that these very ambitions are contributing to the stock's slide. For most of 2025, investors priced Rheinmetall as a pure "Zeitenwende" beneficiary — a bet on heavy armour and artillery. Then came the NATO summit in Ankara in early July 2026. The alliance shifted its focus away from heavy tracked vehicles and toward air defence, drone technology and autonomous warfare. For a company whose identity was forged on Leopard tanks, that pivot poses an existential challenge to the equity narrative.

Analysts now estimate that the share of operating profit coming from the traditional panzer business could shrink to around 20% by 2030, down from roughly 45% in 2023. The market has been front-running that risk for months. The stock trades 35.3% below its 200-day moving average of €1,510.16 — a stark measure of lingering mistrust.

Rheinmetall is trying to head off the re-pricing. On July 13, it took overall responsibility for the InterRoC VII research project for Germany's federal procurement office, testing highly automated military convoys that mix different vehicle types. That same day, its MIRA subsidiary launched a trial of teleoperated shuttles at Düsseldorf Airport in partnership with Rheinbahn. And a day earlier, the group landed a nearly €1bn contract from the British Army to digitalise combat training as part of the Omnia consortium — a 15-year programme that secures jobs in the UK.

Parallel to those moves, Rheinmetall's cooperation with Lockheed Martin on ATACMS production at Unterlüß underscores its ambition to become a leader in long-range precision munitions as well. The company is working to shed its image as a heavy machinery builder and recast itself as a high-tech systems house.

But the transition is proving painful and uneven. Near-term headwinds, including uncertainty around the F126 frigate programme and a miss on the group's own "Nomination" target of €20bn, continue to weigh on sentiment. The new growth segments — drones, air defence, rockets — are expanding fast, but they have not yet reached the scale needed to compensate for the shrinking panzer margin.

On the technical side, the relative strength index stands at 36.0, which historically points to an oversold condition. The annualised volatility over the past 30 days is a lofty 68.9%. Yet a true trend reversal remains elusive. In the past seven sessions the stock lost 8.0%; over 30 days the decline totals 14.3%.

The 52-week low of €902.50, touched on June 25, sits just 8.4% below the current price. With a market capitalisation of €46.2bn, Rheinmetall remains a heavyweight on the DAX, but the valuation story has changed. The market is now treating the group less as a pure defence play and more as an emerging technology company — one that still needs to prove its new businesses can fill the gap left by the old ones.