Rheinmetall’s Share Price Holds a Fragile Line as Raytheon Deal and Munitions Orders Offset a Crushing Political Blow

Rheinmetall shares trade 34% below their 200-day moving average despite a record €60B backlog, as the F126 frigate cancellation undermines Germany's defence spending narrative. Q2 report on Aug 6 is the key catalyst.

The chart looks like a battlefield. Rheinmetall’s stock has shed more than a third of its value since the start of the year, yet the company keeps signing big contracts. On Monday, the shares gained 0.9% to €986.80, a modest bounce that does little to repair the 18% monthly loss or the 50% gap down from last autumn’s record high of €1,995.

The tension is not hard to decipher. One event — Berlin’s surprise cancellation of the €20 billion F126 frigate programme on 24 June — wiped out the market’s assumption that Rheinmetall was a guaranteed winner of Germany’s defence build-up. The stock hit a 52-week low of €902.50 the next day and has been oscillating near that floor ever since.

But the order machine keeps humming. Rheinmetall announced a multi-billion pound contract with Raytheon in the United Kingdom, a deal that follows a string of other wins: 155 mm artillery munitions for Ukraine and autonomous military convoy systems. Both product lines are central to Europe’s rearmament push, and they remind investors that the operational engine is far from stalled.

The mixed signals have left the stock in a no-man’s land. On one side, the order backlog sits at a record €60 billion, and the UK tie-up with Raytheon shows that cross-border partnerships are bearing fruit. On the other, the F126 fiasco proved that even a massive backlog can produce uneven cash flows, and it has raised questions about whether other land-system projects — such as the Puma infantry fighting vehicle — could face similar budget axe swings.

Technical indicators underscore the fragility. The relative strength index stands at 39.1, nearing oversold territory that often precedes a short-term bounce. Yet the stock is trading 34% below its 200-day moving average of €1,494.78, a configuration that institutional investors typically interpret as a clear sell signal. Erholungsversuche — recovery attempts — have so far been met with profit-taking.

The bulls point to diversification as a safety net. Even if marine contracts shift to competitors such as TKMS, Rheinmetall remains the go-to partner for land systems, ammunition and emerging technologies like laser weapons, a field it is developing with MBDA Deutschland. A new €12 billion defence package under discussion in Berlin could steer funds into those areas, even if some of the naval portion is lost.

The bears counter with valuation. After the multi-year rally, the price-to-earnings ratio topped 30 in June, well above the historical average of roughly 19. If earnings forecasts have to be revised down — and the F126 blow makes that more likely — the fair value of the shares could lie well below current levels.

The next big test comes on 6 August, when Rheinmetall publishes its second-quarter report. Investors will scrutinise how management frames the impact of the frigate cancellation on the full-year guidance and strategic outlook. If the company sticks to its ambitious 40–45% revenue growth target for 2026 despite the setback, that could mark the start of a sustained recovery. If the operating margin forecast of around 17% is trimmed, the correction may deepen towards the €800 mark.

For now, the €1,000 level acts as the psychological battleground. Below it, the risk of another test of the June low at €902.50 remains alive. Above it, a sideways consolidation could allow a base to form. The Raytheon deal and the Ukraine munitions order are encouraging, but they have not yet erased the damage done by a single political decision in Berlin. The stock is waiting for proof that the momentum in ammunition, land systems and international alliances can fill the hole left by a cancelled frigate.