Rheinmetall Turns to the Heavens as Ground Projects Wobble

Rheinmetall partners with OHB for Bundeswehr satellite network, diversifying from land systems as CEO doubts Franco-German tank project, while Leopard 3 and stock volatility loom.

Rheinmetall is placing a bold bet on satellite communications to cushion itself against the unraveling of its flagship armored-vehicle ambitions. The defence group has joined forces with Bremen-based space specialist OHB to create a new joint venture, OHB Rheinmetall Space Networks GmbH, that will bid for SATCOMBw Stage 4 — a major Bundeswehr programme for secure military satellite connectivity. The venture seeks end-to-end responsibility for development, system integration and operations, including a dedicated cyber operation centre. Germany’s cartel office has already cleared the partnership, with Dennis Winkelmann and Alexander Beyer appointed as managing directors.

The push into space comes as CEO Armin Papperger openly questions the future of the Franco-German Main Ground Combat System (MGCS) project. Following last week’s collapse of the €multi-billion FCAS fighter programme, Papperger fears a domino effect: Paris could slash defence budgets or even walk away from the tank initiative altogether. No final budget has been set for MGCS, which is supposed to replace the Leopard 2 and Leclerc from 2040. Rheinmetall, Thales and the KNDS joint venture are currently developing the system, but without firm funding, delays are all but certain.

To hedge against that risk, Rheinmetall is already pushing ahead with a Plan B: the Leopard 3. This interim successor is designed to roll out in the early 2030s, buying time and securing a fallback revenue stream should MGCS stall. The company’s space joint venture with OHB fits the same hedging strategy — diversifying away from a heavy reliance on land forces and tapping into a segment where military spending is surging globally.

The strategic manœuvres have done little to steady the share price in the near term. Rheinmetall stock closed Friday at €1,196.60 and now trades at around €1,169.40 — roughly 25% below its level at the start of the year and 41% off the 52-week high of €1,995 struck last September. The slide accelerated after a US-Iranian peace deal dampened demand for defence names, compounded by reports of possible French budget cuts. The shares also sit more than 25% below their 200-day moving average, while 53% volatility signals deep investor unease. A lack of free cash flow in the first quarter added further pressure.

Despite the gloom, some analysts see opportunity. Morningstar maintains its fair value estimate of €2,380, implying significant upside from current levels. The near-term catalyst now rests with Berlin: the government must decide whether to redirect funds freed up by the FCAS cancellation into national programmes. If that cash flows into Leopard 3 development, Rheinmetall would gain valuable planning certainty. Whether the SATCOMBw 4 bid succeeds will be decided in the ongoing tender process, but a win would broaden the group’s long-term revenue base — and prove that Rheinmetall’s future lies not just on the ground, but in orbit.