Rheinmetall's CEO Sees Empty Missile Shelves as the Stock Sits 50% Below Its Peak

Rheinmetall's CEO flags thin NATO missile stockpiles as the group pushes a EUR 30 billion investment plan, with shares down 35% this year.

Armin Papperger did not mince words on Thursday. NATO's missile stockpiles remain worryingly thin, the Rheinmetall chief executive said, with bottlenecks in rocket motors and warheads holding back the build-up. For shareholders, that is far from a footnote — it goes a long way toward explaining why the defense group is pressing ahead undiminished with a EUR 30 billion investment program spread over six years, even as its shares have shed 35% since the start of the year.

The pipeline Papperger sketched out is concrete. Serial deliveries of the Skyranger air-defense system are contractually slated for 2027, with only minimal delays expected and a targeted capacity of up to 400 units a year from the end of 2027. Running in parallel, two joint ventures are nearing the finish line: one with Destinus for cruise missiles, another with Lockheed Martin for artillery rockets. A first cruise-missile order should land in late 2026 or early 2027, Papperger said — which would add another leg to a munitions business already being scaled aggressively. Medium-caliber ammunition output is set to climb from under one million rounds to roughly four million a year, while tank ammunition is targeted to rise from 40,000–60,000 rounds to 240,000.

Headcount tells the same story. Rheinmetall currently employs 34,000 people, is growing net by 10,000 a year, and aims to reach 70,000 by 2030. By then its supply chain is expected to span some 300,000 suppliers. Numbers like these make clear the company is not chasing short-term order spikes but building capacity structurally over years.

Expansion on Two Continents

That build-out is not confined to Germany. In Canada, Rheinmetall's subsidiary has broken ground on an expansion of its Saint-Jean-sur-Richelieu plant in Quebec, timed to coincide with the 40th anniversary of the Canadian arm. Production space is growing by 4,830 square meters and warehouse capacity by a further 2,230 square meters, earmarked above all for uncrewed ground systems. Since 2024, the group says it has invested more than CAD 150 million in its Canadian footprint. Over four decades it has run more than 20 programs for the Canadian armed forces and puts the economic benefit to the country at over CAD 1.5 billion. Nearly 1,000 Canadian mid-sized firms are woven into the supply chain, more than 600 of them in Quebec alone.

Across the Atlantic, Rheinmetall UK is teaming up with Mercedes-Benz UK under the banner "Team Wolf" to chase Britain's Land Mobility Programme. The Mercedes G-Class, a vehicle with a 45-year history, provides the base, while the Telford plant belonging to Rheinmetall BAE Systems Land (RBSL) is to serve as the vehicle integration center. A key aim is to source up to 50% of value creation domestically — a response to a widening NATO trend in which governments make local manufacturing content a condition of defense contracts. Partnering with an established automaker could help meet those demands while leaning on proven vehicle technology.

In Spain, meanwhile, the group is deepening cooperation with Indra on land platforms, with a contract signing alongside the Spanish defense ministry targeted before year-end.

Governance in Close Contact

The pace is being coordinated tightly at the top, too. Supervisory board chairman Ulrich Grillo told a congress in Düsseldorf that he speaks with Papperger "sometimes three times a day." His line — "the fast eat the slow" — fits a company that, despite a difficult capital-market backdrop, has no intention of losing time.

A Valuation Gap the Market Won't Close

The share price has yet to reflect any of these ambitions. The stock trades at EUR 1,010.40, roughly 50% below its 52-week high of EUR 2,007.00 set on October 3. It sits 26% away from its 200-day moving average of EUR 1,372.21 — a signal that the medium-term downtrend remains intact. On Wednesday the paper closed at EUR 1,012.80, down 1.4%, bringing the monthly decline to 16%.

The broader backdrop is not helping. The US Federal Reserve raised its key rate by 0.25 percentage points on Wednesday, its first hike since 2023. Higher rates make capital more expensive across the board and weigh especially on growth names with heavy investment plans — an environment in which operational wins like the Canadian and British expansions are struggling to show up in the price.

That disconnect between the industrial build-out story and the chart is likely to keep investors occupied in the months ahead. While Papperger bets on structurally rising capacity in munitions, air defense and cruise missiles, the market appears to be pricing in political uncertainty and a general skepticism toward defense stocks more heavily than the concrete order prospects for 2027 and beyond. The growth program is running on several continents at once; the open question is when the share price starts to run with it.