Rheinmetall Shares Sink to 52-Week Low on Ex-Dividend Day as €285m Cash Drain and JPMorgan Downgrade Overshadow Record Orders

Despite raising annual payout to €11.50, Rheinmetall shares hit €1,144 low as Q1 revenue misses by €300M and free cash flow turns negative amid heavy investment.

Rheinmetall’s decision to lift its annual payout to €11.50 per share was supposed to reward long-suffering holders, but the ex-dividend session on Wednesday turned into another bruising chapter for Europe’s top defence stock. The shares slid to a fresh 52-week low of €1,144, extending a seven-day rout that has now wiped 18.94% from the share price. At those levels, the stock sits roughly 43% below the autumn peak and 30.05% beneath its 200-day moving average — a bearish technical picture that few in the market had anticipated at the start of the year.

The selling pressure was compounded by a sharp downgrade from JPMorgan, which cut its rating on Rheinmetall from “Overweight” to “Neutral” and set a price target of €1,500. The US bank pointed to first-quarter revenue of €1.94 billion, which undershot consensus by around €300 million, as the trigger for its more cautious stance. Operating profit rose 17% to €224 million in the January-to-March period, but that too missed analyst estimates, adding to the sense that the company’s growth story is losing momentum.

More worrying for many investors was the free cash flow, which swung to a negative €285 million. The outflow reflects heavy upfront investment in new production lines and lower advance payments from customers, a combination that raises questions about how quickly Rheinmetall can convert its bulging order book into cash. Management, however, insists the weakness is temporary. The full-year forecast remains unchanged: revenue of between €14.0 billion and €14.5 billion with an operating margin of roughly 19%. For the current quarter, executives expect a marked acceleration in both sales and order intake, pointing to the €1.7 billion SPOCK-1 contract and a planned joint venture with ICEYE to manufacture synthetic-aperture radar satellites.

On the technology front, Rheinmetall is doubling down on autonomous systems. At its Neuss plant, series production of the FV-014 kamikaze drone is under way, with first deliveries to the Bundeswehr scheduled for 2027. The drone has a flight time of 70 minutes, a range of 100 kilometres, and carries a 4-kilogram warhead. Separately, the group is working on a joint venture for cruise missiles capable of reaching targets up to 700 kilometres away, using AI-powered target recognition. The aim is to reduce dependence on traditional armaments and carve out a bigger role in precision autonomous weapons.

Despite the recent share price slide, the broader analyst community remains largely constructive. Of the 21 experts covering the stock, the majority still recommend buying, with a median price target of around €1,997. Goldman Sachs is the most optimistic at €2,500, while Warburg Research recently reaffirmed its “Buy” rating with a €1,550 target, albeit cut from €1,700 by analyst Christian Cohrs. But the gap between the current share price and the average target — roughly 63% — is unusually wide, signalling that the market is demanding clear proof of execution before awarding the group any valuation premium.

The annual general meeting, held just before the ex-dividend date, was not without controversy. The umbrella organisation of critical shareholders filed a motion to deny the board discharge for the 2025 financial year, citing objections to the management’s strategy and to arms deliveries to countries with questionable human-rights records. The dividend of €11.50 per share — a sharp increase from last year’s €8.10 — is scheduled to be paid out on 15 May 2026, and FactSet analysts already project an even higher distribution of €15.14 for the next financial year. In the near term, chart-watchers are eyeing the support zone at €1,071. Should that hold, the stock could attempt a recovery towards resistance levels at €1,211 and €1,273. But with the first-quarter cash flow hole and sceptical rating agencies weighing on sentiment, the road back looks steep.