Rheinmetall Stock Correction Offers Insight into Europe’s Defence Boom

Rheinmetall AG shares have fallen roughly 28% to €1,450 amid peace-talk headlines and profit-taking, but the company maintains record sales, a €64 billion backlog, and ongoing expansion in ammunition and air-defence systems.

Published by Ecem EFE

3 December 2025, 12:59 published Updated 3 December 2025, 12:59

Rheinmetall AG: CEO Insider Buying Signals Confidence Amid Stock Decline

Rheinmetall AG (RHM), Germany’s leading defence manufacturer, has experienced a rollercoaster ride in recent weeks. After reaching record highs above €2,000 in early October 2025, the stock has fallen sharply to around €1,450–1,460, reflecting a roughly 28% drop. Despite the pullback, the company’s fundamentals remain robust, underpinned by record sales, a €64 billion backlog, and aggressive expansion in ammunition and air-defence systems.

This article explores the recent price action, structural growth drivers, short-term technical trends, and the key developments shaping Rheinmetall’s outlook.

Why Rheinmetall is Falling Now

Rheinmetall’s recent decline is largely driven by macro headlines rather than company-specific setbacks. On 24 November, reports emerged of a “refined peace framework” from U.S.–Ukraine talks in Geneva, triggering a sell-off across European defence stocks.

Analysts argue the reaction may be overstated, noting that European defence expansion is supported by structural budget increases unlikely to reverse even with a ceasefire. Furthermore, Rheinmetall’s stock has soared over 1,600% since early 2022, making profit-taking after a multi-year rally a natural correction.

Technical Headwinds and Volatility

Short-term traders face a bearish technical setup. As of 2 December 2025, Rheinmetall trades below key moving averages (SMA 20/50/200) and exhibits oversold conditions on the RSI-14. Quantitative models, such as those from StockInvest.us, project a potential further 17% decline over the next three months, with a 90% probability range between €1,176–1,445.

Support levels are identified around €1,431–1,436, with deeper bands near €1,308–1,322, while resistance sits around €1,493–1,512. Volatility remains high, with daily swings averaging 3–4% and occasional ±5% moves.

Record Growth and a Massive Backlog

Rheinmetall’s Q3 2025 report highlights strong operational momentum:

Group sales: €7.5 billion (+20% YoY)
Defence sales: +28%, driven by vehicle systems and ammunition
Operating result: €835 million (+18% YoY)
Operating margin: 11.1% overall; 13.6% in defence
Backlog: €64 billion, up from €52 billion a year earlier

Management reaffirmed 2025 guidance, expecting sales growth of 25–30% and an operating margin of ~15.5%, signaling confidence in continued expansion.

Expansion Across Ammunition and Air Defence

The Weapon and Ammunition division is a key growth driver, generating €2.0 billion in sales (+30% YoY) in the first nine months of 2025. The backlog in this segment climbed to €23.2 billion, fueled by multiple 155mm artillery contracts for NATO countries and Ukraine.

Rheinmetall is building or expanding 13 plants across Europe, including new ammunition and propellant facilities in Lithuania, Latvia, and Bulgaria, addressing supply bottlenecks. The company is also ramping up Skyranger turret production—a 30mm short-range air-defence system designed to counter Iranian-made drones in Ukraine, cementing its position in counter-drone and air-defence markets.

Strategic Pivot: Defence Over Automotive

Rheinmetall is accelerating its transition from a struggling automotive supplier to a global defence champion:

Converting former automotive plants in Germany into defence facilities
Acquiring NVL, Lürssen Group’s naval division, to expand into naval systems
Expanding into space-based defence assets via Rheinmetall ICEYE Space Solutions

Long-term targets are ambitious: €40–50 billion in annual sales by 2030 and a backlog potentially reaching €120 billion by mid-2026.

Analyst Sentiment and Insider Confidence

Despite the recent correction, analysts remain broadly bullish. Consensus ratings point to an average 12-month target of €2,220, implying ~50% upside from current levels. BofA Securities, Barclays, and Kepler Cheuvreux highlight Rheinmetall’s growth trajectory, margin profile, and exposure to European defence budgets.

Adding to the confidence narrative, CEO Armin Papperger purchased shares at €1,421 on 1 December 2025, signaling conviction amid the pullback.

Structural Growth vs. Political Risks

Rheinmetall benefits from a long-term European defence upcycle:

European NATO countries are expected to invest €2.2 trillion in defence by 2035
The sector already grew 10.1% in 2024 to $378 billion

However, risks remain: headline-driven volatility, budget delays, operational complexity, and ESG or reputational pressures could affect performance.

Takeaway: Timing and Perspective Matter

Rheinmetall’s story embodies a classic tension between short-term fear and long-term growth. Technical charts suggest caution for traders, while strong fundamentals, structural demand, and strategic expansion make the company a compelling case study in European defence rearmament. The recent pullback underscores the importance of perspective, as multi-year contracts and backlog strength may buffer the stock against headline-driven swings.