Rheinmetall Sells Its Automotive Past for €350M and Pushes into Space, but the Stock Can’t Escape the Gravity of Investor Skepticism

Rheinmetall sells its automotive business for €350M, shifts focus to defence and space amid stock decline of 26% YTD, despite new contracts and ILA Berlin showcases.

Rheinmetall is trying to rewrite its corporate identity in one sweeping move. On 3 June 2026, the Düsseldorf-based defence group signed a deal to sell its remaining civilian business — the Power Systems automotive unit — to Aequita for roughly €350 million. The transaction, expected to close in the fourth quarter subject to regulatory approval, eliminates the low-margin legacy that had long been a drag on margins and management bandwidth.

Yet with the stock trading at €1,186.00, down 0.35% on the news and some 26% below its level at the start of the year, investors are clearly not convinced that a cleaner balance sheet alone will revive the share price. The shares now sit about 27% below their 200-day moving average, and the relative strength index has slipped to 39.1 — approaching oversold territory but not quite there.

The same week, Rheinmetall is making a very different kind of statement at the ILA Berlin air show, where from 10 to 14 June it is showcasing its pivot toward air, space and ground-based defence on 840 square metres of exhibition space. Among the marquee exhibits are the autonomous MQ-28 Ghost Bat fighter jet, developed in cooperation with Boeing, and the FV-014 loitering munition system — a hybrid of drone and artillery designed for real-time strike missions. The company is also pushing its Skyranger 30 mobile air-defence system, which has already drawn orders from several EU and NATO countries as the war in Ukraine continues to fuel demand for short-range anti-air capabilities.

A major new frontier is space-based reconnaissance. Through its joint venture Rheinmetall ICEYE Space Solutions, the group has secured a contract worth roughly €1.7 billion gross from the German armed forces to build a sovereign satellite constellation. The first satellites, under the project name SPOCK 1, are slated for production in the third quarter of 2026 and will initially support the protection of the Lithuanian brigade and NATO’s eastern flank. The Neuss site, which previously housed automotive operations, will be repurposed for satellite and other defence manufacturing.

Meanwhile, Rheinmetall continues to churn out F-35 centre fuselages at its Weeze facility, where it has already completed the eighth of 400 planned sections for the stealth fighter. A total of 14 NATO nations operate the aircraft, giving the company a long production runway.

All of this industrial activity has yet to translate into market enthusiasm. The first quarter of 2025 generated €1.94 billion in revenue, an 8% year-on-year increase, but that figure missed the analyst consensus by nearly 15%. The company argues that production ramp-ups and major deliveries are heavily weighted toward the second half. CEO Armin Papperger told analysts he anticipates about €20 billion in new nominations in the second quarter, including a Lynx programme for Romania and an F126 frigate contract.

Even after the stock’s 40% slide from its 52-week high of €1,995, the consensus 12-month price target stands at €1,889 — implying more than 50% upside — with a range of €1,408 to €2,500. That wide spread reflects persistent uncertainty over how quickly the torrent of orders will convert into cash flow.

The Power Systems sale adds complexity of its own. Rheinmetall will book an additional non-cash impairment of about €200 million, on top of a previous €350 million write-down. About 6,250 employees worldwide are affected, including those at the Pierburg and Kolbenschmidt brands. The division generated roughly €2 billion in revenue in the 2025 financial year, against €9.935 billion for the group’s continuing operations. Three KS Huayu AluTech sites — Neckarsulm, Walldürn and Langenhagen — remain inside the company as a joint venture, also classified as discontinued operations. The IG Metall union has secured a three-year guarantee on jobs and locations, and Aequita has committed to taking on all transferred staff.

For investors, the immediate milestones are the regulatory clearances and the actual closing in the fourth quarter. The ILA Berlin show will serve as the group’s pitch deck — a chance to persuade the market that a pure-play defence company, unencumbered by automotive legacy and reaching into space, can finally turn its order backlog into the earnings growth the share price has so far failed to reflect.