Rheinmetall’s Factories Are Humming, but Its Shares Are Stuck in a Downdraft

Rheinmetall ramps up artillery shell output, drone deals, and warship production, yet shares fall 16% YTD. Analysts see 50% upside despite bearish chart patterns.

The defence giant is producing artillery shells at a rate that has overtaken the United States, hiring at breakneck speed and signing billion-euro contracts for drones and autonomous warships. Yet its stock just hit a 52-week low. The disconnect between Rheinmetall’s operational momentum and its market reception has rarely been wider.

Production Records Mask a Bleak Chart

Chief executive Armin Papperger laid out the scale of the ramp-up over the weekend: Germany now churns out more conventional ammunition than America. Annual capacity for military trucks has jumped from 600 to 4,500 units, artillery shells from 70,000 to 1.1 million, and medium-calibre rounds from 800,000 to 4 million. The workforce is set to expand from 44,000 to 70,000 by 2030, with 250,000 of the 350,000 job applications received last year coming from Germany alone.

The numbers on the factory floor tell a story of strength. The share price tells a different one. Rheinmetall closed on Friday at €1,341.20 — down nearly 5% on the day, roughly 10% on the week, and the lowest level in twelve months. The stock has shed more than 16% since the start of the year and now trades about 20% below its 200-day moving average.

Chart technicians are flagging a pronounced head-and-shoulders pattern, a classic sell signal. If the €1,300 support level fails to hold, some analysts see a path to €1,000. The fundamental view is far more bullish: the average analyst price target still sits above €2,000, implying roughly 50% upside from current levels.

A €2.4 Billion Drone Deal and a Warship Ramp-Up

On April 22, Rheinmetall signed a framework agreement with the German military for the FV-014 loitering munition system, a kamikaze drone. The contract can reach €2.4 billion; an initial call-off worth around €300 million was booked immediately, covering about 2,500 units with options for a five-figure total. It is the latest sign that the Düsseldorf-based group is pushing hard into autonomous systems.

On the maritime side, serial production of the Kraken K3 Scout unmanned surface vessel has begun at the Blohm+Voss yard in Hamburg. Initial annual capacity stands at 200 units, scalable to 1,000. The management is targeting revenue growth of 40% to 45% for the full year, implying a sales corridor of €14 billion to €14.5 billion, with an operating margin of around 19%.

For 2026, the group expects revenue to hit €14 billion to €15 billion, a jump of roughly 40%. About 65% of production goes to exports, predominantly to NATO allies. The German military has signed procurement contracts worth €111 billion since February 2022, providing a long-term order backlog that keeps the factories running.

Analysts Stay Bullish Even as the Stock Slides

Despite the share price rout, the analyst community remains overwhelmingly positive. Jefferies recently lifted its price target to €2,220 with a buy rating. The consensus across 15 analysts shows zero sell recommendations and 15 buys. The gulf between market sentiment and analyst expectations is striking.

The next reality check comes on May 7, when Rheinmetall reports first-quarter numbers. Whether the operational strength can halt the downward momentum will depend on how convincingly the group converts its record order book into revenue and profit.

The Broader Sector Paradox

Rheinmetall is not alone in facing this tension. Across the defence sector, record demand is colliding with supply-chain risks and investor scepticism. China’s export controls on rare earths, tungsten and antimony — where it controls roughly 90% of global processing — have sent prices soaring and forced European companies to scramble for alternatives. Export licence approval rates have fallen below 25%.

The seven European firms placed on Beijing’s blacklist on April 24 include sensor specialist Hensoldt, which relies on Chinese supply chains for critical minerals — a dependency that analysts say would take 20 to 30 years to replace. Hensoldt has secured a long-term contract for 900,000 gallium-nitride semiconductors through partner UMS, valid until 2030, but the question is whether its record order book of €8.8 billion can be converted into revenue fast enough. Its shares closed at €73.32 on Friday, down nearly 6% on the day.

Lockheed Martin, meanwhile, posted a first-quarter free cash flow of minus $291 million, a sharp reversal from positive $955 million a year earlier, even as it booked $7 billion in PAC-3 orders and a $1.5 billion direct sale of F-16s to Peru. The stock fell to €434.60, with an RSI of 20.3 deep in oversold territory.

RTX delivered the cleanest quarterly report of the group, with revenue up 9% to $22.1 billion and adjusted earnings per share climbing 21% to $1.78. Its total order book reached $271 billion, and management raised full-year guidance. But about 60% of its defence contracts are fixed-price, leaving margins exposed to cost inflation that runs above the general rate.

Kongsberg Gruppen began trading as a pure defence and aerospace play on April 23 after spinning off its maritime division. The stock opened at around 333 Norwegian kroner and climbed to 401.55 kroner by Friday. The company was selected for seven European Defence Fund projects worth an estimated €280 million in EU contributions.

What the Next Two Weeks Will Reveal

Kongsberg reports on April 30, Hensoldt on May 6, and Rheinmetall on May 7. The first-quarter numbers will test whether the unprecedented flow of orders can translate into profitable growth, or whether supply-chain frictions and margin pressures will widen the gap between booking and delivery. For Rheinmetall, the stakes are particularly high: a stock that has lost a fifth of its value since January is betting that the factory floor will eventually win over the trading floor.