Rheinmetall’s Kassel Expansion Collides With a 33% Year-to-Date Slide

The contradiction at the heart of Rheinmetall’s current market position is hard to miss: the defence group is pouring more than €260 million into expanding its tank production hub in Kassel while its share price keeps heading in the opposite direction. The stock closed Friday at €1,036.00, down 3.2% on the day, extending a slide that has now erased a third of the company’s market value since the start of the year.

Investor nerves were frayed late last week by media reports flagging potential delivery delays and possible quality concerns across German defence manufacturers, including Rheinmetall, RENK, HENSOLDT and TKMS. The reports pointed to operational bottlenecks in project execution and raised questions about protective plates attributed to a Rheinmetall group company. What unsettled the market was the breadth of the criticism — it did not single out one manufacturer but cast doubt over the entire sector’s ability to deliver on time and to spec.

That Friday drop was no isolated wobble. The preceding Monday had already seen the stock fall 3.79% to €1,110.80 in Xetra trading, and the selling has only gathered pace since. Over the past month, Rheinmetall shares have lost 14%, while the 30-day decline stands at 9.9%. The current price sits 48% below the 52-week high of €2,007.00 reached on 3 October 2025.

A Growth Story That Refuses to Show Up in the Share Price

None of this turbulence has yet shown up in the order book. Rheinmetall’s backlog stands at more than €80 billion, with over 70% of that firmly contracted. Second-quarter revenue climbed to €3.289 billion, up roughly 69–70% year on year, while operating profit jumped 115% to €562 million. The margin came in at 17.1%, though the secondary reporting puts it closer to 19% — a discrepancy that reflects differing calculation methods between reports.

The disconnect between operational momentum and market sentiment dates back to August, when the company released its quarterly figures. That day, the stock briefly plunged around 9% after Rheinmetall cut its 2026 revenue guidance to €13.7–14.2 billion and reported sharply negative operating free cash flow. The trigger was the German government’s June decision to scrap the F126 frigate programme, a project worth roughly €12.8 billion in which Rheinmetall was slated to serve as lead contractor. Berlin had already spent about €2.3 billion on the programme before pulling the plug in favour of eight smaller MEKO A-200 frigates from ThyssenKrupp Marine Systems.

The fallout extends beyond the corporate level. The Peene shipyard in Wolgast, also owned by Rheinmetall, now has secured work only until mid-2027, putting around 400 direct jobs at risk unless new naval orders — potentially linked to the MEKO frigate programme — materialise.

Kassel: Betting Big on Armoured Vehicles

The Kassel investment is the company’s counter-punch. The Defence Hub at Kassel Airport in Calden will include a logistics centre, training facilities and a planned drone competence centre developed in partnership with TU Darmstadt. The site is earmarked to become Europe’s largest tank plant, with the workforce expected to grow from 2,200 today to 3,000 by the end of 2028 — some reports even suggest 3,500.

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

The expansion rests on Bundeswehr orders worth nearly €40 billion, headlined by a Boxer order valued at €12.4 billion for more than 1,500 vehicles, plus additional framework agreements ranging from €14 billion to €26 billion. The state of Hesse is chipping in €25 million and anticipates around 1,000 new regional jobs. Final decisions on the project’s scope are expected in September and December.

The flagship “Arminius” programme — the Bundeswehr’s planned large-scale Boxer order — remains the key catalyst investors are watching. Final negotiations are scheduled for the second week of September, with parliamentary approval expected in December.

Fresh Contracts Offer Some Counterweight

New business continues to flow despite the noise. American Rheinmetall has delivered the first of eight Lynx XM30 prototypes to the US Army, which will now undergo government development and performance testing. Rheinmetall Canada has picked up a low-single-digit-million contract from the US Department of Defense for replacement components for US Navy mobile launchers, with deliveries scheduled between late 2026 and late 2028. In mid-August, the Bundeswehr ordered additional mobile rescue stations worth over €500 million gross.

Looking further out, the US Bradley replacement programme — valued at more than $45 billion — could present a significant opportunity, with a decision expected towards the end of 2027. Lithuania has also placed orders worth €250 million.

Technical Signals Point to Oversold Conditions

The technical picture suggests the selling may be overdone. The 14-day relative strength index stands at 35.8, indicating oversold territory, while annualised volatility sits at a lofty 39%. Deutsche Bank has maintained its €1,800 price target on the stock — a stark contrast to current levels and a signal that analysts see the company’s operational substance as untouched by the market’s recent mood swings.

The next test comes on 5 November, when Rheinmetall reports third-quarter results. By then, investors will have a clearer read on whether the quality concerns raised in recent days have left operational scars — or whether the order momentum can finally start closing the gap between the company’s performance and its share price.