Rheinmetall's stock has extended its decline, falling to its lowest level since February 2025 after the company released its first-quarter earnings and revised its annual outlook. The shares slipped to €803.6, marking a 52% drop from their 2025 peak, and the stock has become one of the worst performers in the DAX Index this year.
The sell-off follows a period of sustained weakness that began after the German government canceled a major frigate program. The latest earnings report, released this week, showed strong revenue growth but disappointed investors with a downward revision to the company's full-year guidance.
Earnings and Guidance
Rheinmetall reported revenue of €8.4 billion for the first quarter, a 38% increase year-over-year, with operating profit rising to €1.3 billion. However, management now expects annual revenue to reach approximately €13.2 billion, down from the previous forecast of €14 billion to €14.5 billion, citing project delays.
The weakness is expected to be concentrated in the vehicle systems division, which is projected to generate between €5.8 billion and €5.9 billion. Other segments, including weapons and ammunition, air defense, digital systems, and naval systems, are forecast to contribute €4.5 billion, €1.1 billion, €2.3 billion, and €1.2 billion, respectively.
Despite the guidance cut, the company's CEO emphasized the strength of its order book, noting that new production facilities in the United Kingdom and Albacete, Spain, have recently commenced operations. The backlog has surged to €78 billion, up from €56.7 billion, reflecting robust demand from Germany and other European nations that have increased defense spending.
Industry Challenges and Opportunities
While demand for defense products remains high, the industry faces disruption from startups like Anduril, which offer lower-cost alternatives. Additionally, the ongoing conflicts in Iran and Ukraine have highlighted the growing importance of drones in modern warfare, potentially shifting procurement priorities.
Technical Analysis
On the weekly chart, Rheinmetall's stock has broken below a critical support level at €901.9, its June 22 low. The shares have also fallen to the 61.8% Fibonacci retracement level and dropped below the 50-week moving average. These technical signals suggest that the stock could continue its downward trajectory, with the next major support level around €600.
Investors will be watching whether the stock can stabilize at current levels or if further declines are in store. The combination of lowered guidance and technical breakdown points to a challenging near-term outlook.
This article is for informational purposes only and does not constitute financial advice.
