Rheinmetall’s CEO Steps In With Share Purchases After 10% Rout Exposes Market’s Patience Gap

Rheinmetall shares hit a 2025 low as revenue and earnings miss estimates, despite a record €73 billion backlog. CEO Papperger buys the dip, signaling confidence.

The disconnect between Rheinmetall’s swelling order book and its plunging share price has become so stark that Chief Executive Armin Papperger personally stepped into the market on Friday, buying stock after the defence group’s shares hit a new low for the year.

The Düsseldorf-based company’s stock tumbled 10.42% to close at €1,207.20 on Xetra, extending its year-to-date decline to nearly 25%. The sell-off came despite a quarterly report that, on the surface, appeared solid: revenue rose 8% to €1.94 billion, operating profit climbed 17%, and the order backlog hit a record €73 billion — a 30% jump from the prior year.

But the market zeroed in on what it didn’t like. Revenue fell short of analyst expectations, and earnings per share of €2.18 came in roughly 59% below consensus. Management attributed the shortfall to delivery delays, inventory build-up, and one-off integration costs from the newly created Naval Systems division, which had been consolidated for just one month.

The cash flow picture added to the unease. Operating free cash flow swung to minus €285 million, weighed down by heavy investment and working capital accumulation. The company’s €73 billion backlog — which secures factory utilisation for years to come — serves as a buffer, but it did little to calm investor nerves on the day.

JPMorgan responded by downgrading the stock to “Hold” on May 8, while Berenberg and Kepler reaffirmed their “Buy” ratings. The resulting analyst price target range — from €1,450 to €2,500 — reflects the deep uncertainty surrounding the stock’s near-term trajectory.

Papperger, however, signalled confidence by buying shares on the dip. The management team expects deferred revenues to start flowing back into the books as early as the second quarter. The company’s full-year guidance remains unchanged: revenue of €14.0 billion to €14.5 billion with an operating margin of around 19%, and a long-term target of roughly €50 billion by 2030.

Strategically, Rheinmetall is pushing ahead with an aggressive expansion. The new Naval Systems division brings with it ongoing projects worth €5.5 billion. A joint venture with Dutch company Destinus is advancing plans to produce cruise missiles at the Unterlüß facility, with production slated to begin in late 2026 or early 2027.

The broader defence sector is experiencing a similar pattern of record orders and punishing market reactions. Renk shares fell nearly 5% to €49.00 on Friday, despite a first-quarter order intake of €582.3 million — the highest ever for the period — and a backlog of €6.9 billion. Airbus closed at €45.00, down almost 6%, as the Iran conflict weighed on its civil aviation business while its defence division grew 7%. DroneShield posted record customer receipts of A$77.4 million, up 360%, yet its stock barely moved.

Global military spending has reached a record $2.9 trillion, and Europe’s rearmament wave provides structural tailwinds. But the market’s message is clear: execution matters more than ambition. For Rheinmetall, the question is no longer whether the orders will come — but how quickly the company can convert its €73 billion backlog into visible cash flow and earnings.