Rheinmetall's Stock Jumps 15% as NATO Summit Looms, But F126 Cancellation Still Weighs on Q2 Targets

Rheinmetall shares rise 15% from 52-week low to €1,121.80 amid NATO summit hopes, but remain 31.5% down YTD. F126 cancellation poses risk; potential €3.1B Belgian order and insider buying offer support.

The defence contractor’s shares have staged a sharp rebound from their 52-week low, climbing more than 15% over the past week to trade at €1,121.80 — a 2% daily gain. Yet the recovery masks a chasm of doubt: the stock is still down roughly 31.5% year-to-date and remains 45% below the September 2025 record of €1,995.00. The relative strength index, a measure of momentum, has been hovering near neutral territory, registering 49.5 in recent days after dipping to 46.5 earlier in the week.

The immediate catalyst for the move higher is the NATO summit that begins on Tuesday in Ankara. Investors are hoping for fresh commitments from alliance members on defence spending, which would provide a powerful tailwind for the entire sector. But the summit also carries downside risk: disappointing signals could quickly erase the recent gains, especially with volatility remaining extreme.

At the heart of the bearish case is the cancellation of Germany’s F126 frigate programme. The loss of that contract has forced Rheinmetall to slash its Q2 order intake guidance from more than €20 billion to a low double-digit billion figure. The company now faces a potential €300 million revenue shortfall in 2026 unless compensating orders materialise. Management is assessing whether the hit will ripple into the full-year target, though they still expect revenue growth of over 60% for the fiscal year.

A possible counterweight is emerging from Belgium. Media reports indicate the country is preparing to buy air-defence systems worth €3.1 billion, including 20 Skyranger short-range platforms from Rheinmetall. The Belgian ministerial council still needs to approve the deal, but an official announcement could come during the Ankara summit on July 7–8. If confirmed, the order would handily offset the F126 hole and provide fresh credibility to the company’s bulging order backlog of €73 billion — which management expects to climb to around €135 billion by year-end.

Chief executive Armin Papperger has also been sending signals. He bought shares at the trough in late June, a rare insider purchase that market watchers interpret as a vote of confidence in the group’s prospects. At the same time, Papperger has been vocal about past failings, accusing former chancellor Angela Merkel of deliberately weakening Germany’s defence industry by relying on the US. Rheinmetall has since ramped up capacity massively, lifting annual artillery-shell production from 70,000 to one million rounds. The group recently secured another Ukrainian contract for ammunition in the high double-digit millions, with deliveries running through the first quarter of 2027.

Beneath the surface, a broader sector scepticism is taking hold. Rival KNDS shelved its planned IPO recently, and investors are now scrutinising defence stocks for real earnings rather than pure growth narratives. Rheinmetall disappointed with its Q1 revenue growth, and the F126 loss has intensified questions about whether the company can convert its record order book into visible sales quickly enough. The 50-day moving average currently sits at €1,192.70 — roughly 6% above the current price — and a breakout above that level would confirm the rally’s legitimacy. Failure, on the other hand, risks a retest of the €902.50 low.

For now, the stock is in a tug-of-war between near-term momentum and structural headwinds. The NATO summit and the potential Belgian deal offer the most immediate catalysts, while the half-year report due later in the summer will provide the hard evidence investors need. Until then, Rheinmetall’s share price is likely to remain sensitive to every headline out of Ankara.