Rheinmetall Races to Scale Kamikaze Drone Production as Stock Sinks to 52-Week Low

A curious tension has taken hold at Rheinmetall. The defence contractor is ploughing ahead with one of its most ambitious production expansions to date, turning a former auto-parts factory into a hub for kamikaze drones. Yet the share price continues to slide, dragged down by a combination of technical factors and broader market reassessment of defence stocks.

The centrepiece of the industrial push is the FV-014 drone, a loitering munition capable of circling a target area for up to 70 minutes before striking. Chief executive Armin Papperger told shareholders at the annual general meeting that production of the model is being scaled up beyond the existing site in Brunswick to include the Neuss plant near Düsseldorf. The Neuss facility, which once churned out automotive components, is being repurposed for precision weapons — a clear sign of how deeply Rheinmetall is shifting capital and capacity toward defence. A Bundeswehr framework contract worth around €300 million provides the initial foundation for the new production line.

The move comes as the group posted first-quarter results that, while operationally solid, fell slightly short of analyst expectations. Revenue rose 8 percent to €1.94 billion, but the figure was held back by delayed deliveries of military trucks. Customers pushed back vehicle orders worth roughly €300 million into the second quarter, a logistical hiccup that management insists will not derail the full-year outlook. Rheinmetall still targets revenue of between €14.0 billion and €14.5 billion for 2026. Operating profit for the opening quarter climbed 17 percent to €224 million, with margins bolstered by the defence divisions.

None of that prevented the stock from tumbling to a 52-week low on Wednesday, when the shares closed at €1,118 — and later slipped further to around €1,105. The decline of roughly 30 percent since the start of the year and nearly 45 percent from the September 2025 high of almost €1,995 reflects more than just the dividend effect. Rheinmetall went ex-dividend on the same day, with the annual general meeting having approved a payout of €11.50 per share for fiscal 2025, a surge of about 42 percent from the prior year. The total distribution of €369 million is due to be paid on 15 May, but the mechanical price adjustment from the dividend cut has been compounded by profit-taking after last year’s strong rally and growing anxiety over whether the company can execute on its ambitious growth trajectory.

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

Some of the selling pressure can be attributed to speculation about a potential ceasefire in Ukraine, which has weighed on defence stocks across Europe. Yet analysts largely view the sell-off as overdone. Warburg Research lifted its rating on the stock from Hold to Buy, even as it trimmed the target to €1,550. Barclays and MWB Research remain bullish with price objectives of €1,450 and €2,000 respectively. The consensus analyst target sits at around €2,011, implying potential upside of more than 80 percent from current levels. Even the most bearish forecast among the covering analysts still points to a significant recovery.

Supporting that view is a record order backlog of €73 billion at the end of March, which includes both firm contracts and expected call-offs under framework agreements. That buffer gives the company considerable visibility and underpins the full-year guidance. Management has repeatedly reaffirmed its revenue and margin forecasts, betting that the delayed truck deliveries will materialise in the second quarter and restore confidence in the numbers.

On the technology front, Rheinmetall is also deepening its collaboration with Deutsche Telekom. The two groups are developing a protective shield against drones and sabotage for critical infrastructure and urban areas. The division of labour is clear: Rheinmetall supplies sensor technology and countermeasures — including jammers, interceptor drones and potentially laser systems — while Telekom contributes mobile-network expertise. The rationale is that an increasing number of drones are being controlled via mobile networks rather than conventional radio frequencies, creating new vulnerabilities. Rheinmetall already has a track record in this area, having partnered with Hamburg police and the Hamburg Port Authority in December 2025 on drone defence in the port.

Rheinmetall at a turning point? This analysis reveals what investors need to know now.

The cooperation was unveiled at the AFCEA security fair in Bonn, while the company also showcased a broader range of military solutions, including maritime systems following the integration of NVL, at the BSDA exhibition in Bucharest.

For the months ahead, the focus will shift from announcements to execution. If the delayed truck handovers come through as expected, the annual targets will carry more weight. Until then, the stock sits in an uncomfortable space — caught between explosive industrial momentum and a chart that has yet to find its footing.

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