On April 22, 2025, Rheinmetall AG's stock took a significant hit, falling 2.97 percent to 1,420.50 euros during trading on the XETRA platform. This decline comes after the stock reached a record high of 1,500.00 euros just a week prior, on April 16. Despite the recent drop, Rheinmetall’s stock has seen an impressive increase of around 132 percent in value since the beginning of the year and more than 180 percent over the last twelve months, according to market analysts.
The downturn is attributed to profit-taking after a strong performance, as well as a competitive threat from BAE Systems, which recently announced a breakthrough in the production of 155-mm artillery ammunition. David Perry, an analyst at JPMorgan, noted that while Rheinmetall remains a key player in this sector, the low barriers to market entry could attract more competitors, potentially increasing price pressure in the long term.
BAE Systems revealed that it plans to increase its production capacity for 155-mm artillery shells by sixteen times this summer with the launch of a new explosives filling plant in South Wales. This expansion follows over 150 million pounds of investments in their ammunition facilities since 2022, aimed at enhancing production technologies for next-generation explosives and propellants.
Despite the immediate negative impact on Rheinmetall's stock from BAE's advancements, analysts maintain a positive outlook for the company. The ongoing conflicts in Ukraine and the Middle East, along with the rising defense budgets in Europe and the United States, are expected to sustain high demand for artillery ammunition. The market is large enough to accommodate multiple strong players, especially as countries seek to bolster domestic production for security reasons.
Rheinmetall is not only facing competition but is also positioned to benefit from long-term contracts and its strategic role as a defense supplier. The company has set an ambitious goal to double its net profit by 2027, leveraging its robust order books and the increasing demand driven by global tensions.
On the same day, the broader DAX index saw a slight decline of 0.21 percent, with Rheinmetall's performance placing it in the lower third of the index. The stock's trading volume was reported at 127,360 shares, compared to 235,823 shares traded the previous day. Currently, Rheinmetall's stock is 5.30 percent below its 52-week high of 1,500.00 euros, while the 52-week low stands at 437.50 euros. With a market capitalization of 63.59 billion euros, Rheinmetall holds a 3.31 percent weighting in the DAX index, ranking it seventh among its constituents.
As the market continues to respond to these developments, it remains to be seen whether Rheinmetall can regain its footing and continue the upward trajectory that has defined its recent performance. Investors are urged to keep a close eye on both the competitive landscape and the ongoing demand fueled by geopolitical factors.
In summary, while the immediate outlook for Rheinmetall's stock appears challenging due to profit-taking and increased competition from BAE Systems, the long-term prospects remain optimistic. The company is well-positioned to capitalize on sustained demand for military supplies, particularly in the context of rising global tensions and defense spending.
