Rheinmetall’s Croatian Unmanned Venture and €70bn Orders Do Little to Quell Execution Worries

Rheinmetall shares slide 38% YTD and back below €1,000, even as the defense group expands in Croatia and reports a €70bn+ order backlog amid sector-wide shifts and a cancelled frigate program.

Rheinmetall has been delivering a steady stream of operational milestones in recent weeks — a new joint venture in Croatia, a growing order backlog and a flurry of contract announcements. Yet the Düsseldorf-based defence group’s stock has done little but head south. The disconnect between corporate progress and market sentiment has rarely felt starker.

On Friday, shares closed at €993.00, slipping 1.90% on the day and diving back below the psychologically important €1,000 threshold. The weekly loss stood at 9.48%, while the monthly slide deepened to 16.96%. Since the start of 2026, the stock has shed 38.00%, and over twelve months the decline reaches 46.25%. At €47.17 billion in market capitalisation, Rheinmetall now trades roughly 50% below its 52-week high of €1,995.00 reached in September 2025 — and only about 10% above the year’s low of €902.50 set on 25 June.

A new unmanned-systems hub takes shape

On 8 July, Rheinmetall announced it had formed Rheinmetall Unmanned Vehicles d.o.o. in partnership with Croatian specialist DOK-ING. The move followed a majority acquisition: on 1 July, the German group had already taken 51% of DOK-ING. Founder Vjekoslav Majeti? retains the remaining 49%. The venture aims to turn Croatia into a European centre for unmanned ground platforms, combining DOK-ING’s three decades of experience with Rheinmetall’s global production capabilities. Research and development will stay in Croatia, with initial systems focused on combat support, engineering tasks and mine clearance.

The Croatia push is the latest in a series of expansion steps that also includes new orders across Rheinmetall’s product lines. Yet the shares have continued to slip, underscoring a deeper worry among investors: can the group actually convert its enormous order book into revenue and profit?

Sector-wide headwinds and a cancelled frigate

The broader European defence sector has come under pressure as analysts reassess NATO’s spending priorities. A study from Jefferies, which weighed on Rheinmetall, Hensoldt and Renk alike, highlighted a shift toward air defence, long-range weapons, drones and reconnaissance, leaving traditional armour and artillery in a less favourable position. Together the three listed German defence players have lost roughly €58 billion in stock-market value in the recent sell-off.

Not all Jefferies calls were bearish: in a separate note the bank reiterated a “Buy” rating on Rheinmetall with a price target of €1,300 — but attached the condition that order momentum in air defence and electronics must be sustained. MWB Research, meanwhile, removed its buy recommendation and slashed its price target to €1,150 from €1,400.

A concrete blow came from Berlin’s decision to scrap the multi-billion-euro F126 frigate programme. For Rheinmetall the cancellation means a potential revenue loss of up to €300 million and dents its ambitions in the naval segment.

The capacity question looms large

With an order backlog north of €70 billion, the key risk flagged by analysts — including Goldman Sachs — is whether Rheinmetall can work through that pipeline fast enough to satisfy profit expectations. The same execution concern haunts the entire industry: bloated backlogs are only valuable if they translate into recognised sales.

Technical indicators reinforce the bearish picture. The stock trades 15.05% below its 50-day moving average of €1,168.88 and 34.59% below the 200-day average of €1,518.21. The RSI has dropped to 37.2, approaching oversold territory but not yet signalling a reversal. With 30-day annualised volatility at 68.77%, the market remains exceptionally jumpy.

All eyes on the Q2 report

Investors now face a critical test on 6 August, when Rheinmetall publishes its second-quarter results and is expected to provide more clarity on the F126 fallout. Until then, the gap between operational wins and market confidence persists. The series of recent orders and the Croatia joint venture have done little to restore trust after the frigate cancellation and the sector’s broader rotation. Whether the stock’s oversold condition can eventually stabilise the price will depend on convincing evidence that the order backlog is turning into cash flow.