Rheinmetall’s Order Book Keeps Growing, Yet the Share Price Keeps Falling — Can the Two Finally Converge?

The disconnect has rarely been starker. Rheinmetall’s operational machine is firing on all cylinders — prototype vehicles handed over to the US Army, a flagship European production hub taking shape, and an order backlog north of €80 billion. And yet, the stock closed Friday at €1,036.00, down 3.2 percent on the day, extending a slide that has now erased a third of the company’s market value since the start of the year.

For investors, the central question has become painfully familiar: how long can a torrent of positive operational news fail to move a share price that keeps bleeding?

A Delivery Milestone in the US

The latest piece of operational progress came on Tuesday, when Rheinmetall handed over the first Lynx-XM30 prototype vehicle to the US Army. The delivery marks a concrete step in the company’s push into the American defence market — a strategic priority that could yield far larger rewards down the line. The Bradley infantry vehicle replacement programme, for which the Lynx is a contender, carries a potential value of more than $45 billion, though a decision is not expected until late 2027.

That long wait for a US verdict is partly why investors remain cautious, even as nearer-term contracts accumulate. A Rheinmetall unit recently secured an order for machined components from Kongsberg Defence & Aerospace, alongside a smaller US contract worth $710,000. Days later came a spare-parts supply agreement with the US Navy — the kind of steady, mid-sized deal flow that underscores sustained Western demand for the group’s products, even if it has done little to arrest the share price decline.

Kassel: Europe’s Largest Tank Plant in the Making

At the heart of the company’s European expansion plans sits Project “Arminius” — an ambitious effort to build what Rheinmetall describes as Europe’s largest tank production facility at Kassel. The company has earmarked more than €260 million for a defence hub at Kassel Airport in Calden, encompassing a logistics centre, training facilities and a planned drone competence centre developed in partnership with TU Darmstadt. Earlier reports had put the investment figure at around €270 million, with funds also directed toward expanding tank production and drone testing.

The workforce at the site is slated to grow from 2,200 employees today to 3,000 by the end of 2028, with some estimates suggesting the figure could reach 3,500. The state of Hesse is contributing €25 million in support and expects roughly 1,000 new jobs to emerge in the region.

The expansion rests on a formidable foundation of German military orders — nearly €40 billion in total, including a Boxer vehicle order worth €12.4 billion for more than 1,500 units, plus additional framework agreements valued between €14 billion and €26 billion. Final decisions on the scope of the Kassel build-out are expected in September and December.

Should investors sell immediately? Or is it worth buying Rheinmetall?

The Numbers Are Strong — So Why the Gloom?

The financial picture remains robust by almost any measure. Second-quarter revenue climbed 70 percent year-on-year, while operating profit surged 115 percent, with margins holding steady at around 19 percent. The order backlog stands at over €80 billion.

Yet the market’s mood has soured considerably. The stock has lost 9.9 percent over the past seven days and 14 percent over the past month. From its 52-week high of €2,007.00, reached on 3 October 2025, the shares now trade 48 percent lower. The 14-day relative strength index sits at 35.8, pointing to oversold conditions, while annualised volatility has climbed to 39 percent.

Part of the recent pressure stems from profit-taking that has yet to run its course. But there are also company-specific concerns. Rheinmetall lowered its 2026 revenue guidance following the loss of the F126 frigate programme to TKMS, a group subsidiary. The knock-on effect is being felt at the Peene shipyard in Wolgast, also owned by Rheinmetall, which now has secured work only until mid-2027. Around 400 direct jobs at the yard depend on new naval contracts, potentially including future MEKO frigate orders.

Analysts Hold Their Ground

Despite the market turbulence, institutional conviction has not wavered. Deutsche Bank Research reaffirmed its buy recommendation with a price target of €1,800 — a level that implies substantial upside from the current share price. The bank’s stance suggests that, from a fundamental perspective, the operational substance of the company remains intact, even as market dynamics tell a different story.

A separate research house has assigned a “hold” rating, though this automated assessment carries less weight than the Deutsche Bank view.

A Sector Under Scrutiny

The broader environment for German defence companies has also grown more fraught. Reports of arson attacks on defence firms in Munich on Thursday have cast a spotlight on the security situation in which these companies now operate. No direct connection to Rheinmetall has been established, but the incidents serve as a reminder of the heightened risk profile surrounding the sector.

For now, investors are left weighing two very different narratives: a company delivering record order intake and strategic milestones across multiple continents, against a share price that continues to defy the fundamental news flow. The Kassel expansion, the US deliveries, the steady stream of contracts — all point to a business firing on all cylinders. Whether the market eventually agrees remains the open question.