Rheinmetall’s Defence Makeover Gathers Pace, but the Share Price Remains Stuck in a Bearish Rut

Rheinmetall sells Power Systems to Aequita for €350M, aiming for defense-only re-rating, but stock trades near 52-week low amid technical pressure and H2 execution risk.

The strategic logic behind Rheinmetall’s decision to sell its Power Systems division is clear enough: a focused defence group commands a higher valuation than a hybrid conglomerate. Yet the stock, which closed at €1,190.00 on Friday, continues to trade under heavy technical pressure, with the 52-week low of €1,099.80 now just 8.20% away. The gap between corporate ambition and market sentiment has rarely been wider.

The disposal to Aequita, signed on 3 June 2026, carries a preliminary purchase price of €350 million and covers 6,250 employees previously tied to the civil automotive legacy. Rheinmetall expects to complete the transaction in the fourth quarter of 2026, subject to regulatory approvals. In the short term, the deal comes at a cost: the company will book additional impairment charges of around €200 million, on top of a €350 million non-cash charge already taken in December. Management is betting that a cleaner, defence-only narrative will eventually unlock a re-rating.

That optimism is not yet reflected in the charts. The stock has lost 25.69% since the start of the year and sits 40.35% below its 52-week high. All major moving averages have been breached – the 50-day line at €1,344.32 is 11.48% above the current price, while the 200-day line is a full 26.56% higher. The relative strength index of 39.6 is approaching oversold territory, but analysts caution that this alone does not signal a reversal. The annualised 30-day volatility of 51.81% leaves the door open to sharp counter-moves, but it also raises the risk of further downside.

Operational evidence, however, suggests the order pipeline remains robust. The Bundeswehr has signalled demand for 35 additional Schakal wheeled armoured vehicles, valued at roughly €650 million, and 23 Büffel recovery vehicles worth around €360 million. These are not speculative frameworks: the contracts underpin concrete procurement plans. Rheinmetall is also expanding its Kassel site, targeting 3,000 employees by 2029 – a clear sign that management expects sustained, not cyclical, demand.

Yet the first-quarter results disappointed the market. Revenue of €1.94 billion grew 8% year-on-year but missed consensus expectations by roughly 14.9%. While margins were broadly in line, the revenue shortfall stoked nervousness. The full-year sales guidance of €14 billion to €14.5 billion was reaffirmed, with management pointing to production ramp-ups and deliveries weighted to the second half – precisely the area where execution pressure now builds.

The tug-of-war between strategic clarity and chart weakness is the defining feature of Rheinmetall’s current phase. The sale of Power Systems removes the conglomerate discount that many investors cited as a drag. The Bundeswehr orders provide a tangible demand backdrop. But the share price has yet to reward either development. The next test comes in August when the second-quarter results will reveal whether the H2 ramp is on track. Until then, the €1,099.80 support level remains the most closely watched line in the sand.