Rheinmetall’s Record €73 Billion Order Book Can’t Shield the Stock From a Two-Pronged Attack

German defence giant Rheinmetall’s shares flirt with a 52-week low as a cash-flow squeeze and potential auto-industry competition offset a historic €73 billion order backlog.

The gap between Rheinmetall’s operational heft and its stock-market fortunes has rarely been wider. The German defence contractor boasts a historic order backlog of €73 billion and rising revenues, yet its shares are flirting with a 52-week low, battered by a cash-flow squeeze and a fresh competitive threat from an unlikely source: the auto industry.

Mercedes-Benz CEO Ola Källenius recently signalled openness to diverting some of his company’s production capacity towards defence equipment. While the comments fell short of a concrete plan, they were enough to shift the narrative around Rheinmetall’s valuation premium. The prospect of industrial heavyweights entering the fray reinforces the view that the stock’s heady multiples may have priced in a level of market dominance that is now being questioned.

This sentiment shift arrives at a delicate technical moment. Rheinmetall shares closed at €1,123.80 on Friday, down 2.01% on the day and 6.91% over the week. That leaves them just 0.52% above the 52-week trough of €1,118.00 — a level that acted as a floor earlier this month after a sell signal was triggered on 13 May. The distance to key moving averages is also widening, reinforcing the bearish chart pattern that systematic traders and short-term speculators are watching closely.

The underlying business tells a more resilient story. First-quarter revenue climbed 8% to €1.9 billion, while the order backlog swelled to a record €73 billion — a figure that would take years to work through. Yet the market’s focus has landed squarely on the free cash flow, which swung to negative €285 million in the period. Heavy capital spending and rising working capital demands have starved the balance sheet, sparking investor unease.

Chief executive Armin Papperger is pressing ahead with a sweeping transformation nonetheless. Rheinmetall plans to manufacture its own cruise missiles, directly challenging established rivals, and recently consolidated its naval ambitions by integrating the NVL shipyards into its accounts for the first time at the start of 2026. A partnership with Deutsche Telekom to build a drone-defence shield using mobile network infrastructure further extends the company’s reach beyond traditional arms.

The group is also leaning heavily on Eastern European demand. At the BSDA defence fair in Bucharest, Rheinmetall is showcasing air-defence systems such as Skynex and the Lynx infantry fighting vehicle — products that are central to near-term revenue expectations. Management reaffirmed its full-year guidance, and shareholders approved a dividend of €11.50 per share at the annual meeting.

Analyst opinion remains largely constructive despite the stock’s slide. Bernstein Research holds an “Outperform” rating, albeit with a reduced price target of €1,900. Warburg Research continues to recommend buying, while Deutsche Bank and UBS have issued positive assessments. JPMorgan stays neutral. A small but noteworthy signal of bottom-fishing came from Georgi Vermögensverwaltungs GmbH, which added to its Rheinmetall position — evidence that some investors see value in the current weakness.

The immediate test comes on 21 May, when Rheinmetall is scheduled to present in New York. The zone around €1,118.00 will dictate short-term direction: a hold could allow the stock to stabilise, while a break below that level would amplify the technical damage and likely trigger further selling.