Rheinmetall shares plummeted over 4% on Monday, emerging as one of the German market’s worst performers amid broader gains. The selloff stems from impending peace negotiations between the US and Russian leaders in Alaska, which could determine the Ukraine conflict’s trajectory. Hints of territorial compromises have rattled defense investors, with European arms stocks—including Rheinmetall, Renk, and Hensoldt—all declining. Despite the turbulence, Rheinmetall’s CEO made a symbolic €200,000 share purchase at €1,540.50 per share, interpreted either as a confidence signal or a bid to stabilize prices.
Political and Financial Headwinds Mount
The timing coincides with Germany’s partial arms export freeze to Israel, sparking coalition infighting and compounding Rheinmetall’s challenges. Recent quarterly results already revealed cracks in the defense boom, with stagnant orders (€63 billion) and a negative cash flow of €644 million. Analysts warn that any Ukraine peace deal could abruptly end the sector’s "supercycle," as demand for tanks and ammunition wanes. With shares still up 164% year-to-date, the market’s exaggerated growth expectations now face a harsh reality check.
