(June 24): Rheinmetall AG shares plunged Wednesday as Germany withdrew from a key warship contract, dealing a blow to investor confidence in the defence contractor following years of huge gains.
The shares fell as much as 17%, their biggest intraday decline since April 2025, as Germany confirmed it had shelved the purchase of six F126 anti-submarine frigates from Rheinmetall. The project’s value had been estimated at approximately €10 billion.
Instead, Berlin will buy vessels from another German manufacturer, TKMS AG & Co, a government statement said. TKMS shares rose as much as 12%.
The cancellation implies a roughly €2 billion writeoff for Rheinmetall, according to Morgan Stanley analysts led by Marie-Ange Riggio. More broadly, it shakes the market’s confidence in German defence procurement and contract visibility, they wrote.
“This is clearly a negative news,” Riggio told clients. “The potential cancellation comes as a clear surprise, particularly as Rheinmetall had been confident the contract would be secured before the summer break.”
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Germany’s decision unravels a key project for Rheinmetall, which acquired shipbuilder Naval Vessels Lürssen after the defence ministry arranged for the latter company to take over as the lead contractor for the F126 project.
The setback adds to Rheinmetall’s difficult year. Its shares have slid more than 36% in 2026 after a series of lacklustre earnings reports and as investors rotated out of land defence plays in favour of drone and air defence manufacturers. The firm has lost roughly €26 billion in market value this year, reversing some of the steep gains driven by higher European military spending.
Mwb Research analyst Jens-Peter Rieck lowered his price target on Rheinmetall after the news, warning that “the cancelled programme is not supportive for their ambitious guidance”. He has a €1400-per-share target on the stock, still well above the current €981.60 price.
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Rieck also highlighted the more conservative projections at rival tankmaker KNDS NV, which is planning an initial public offering in Frankfurt and Paris. On Wednesday, its current shareholders — the French state and Wegmann & Co GmbH — said they are proceeding with the sale, offering a 20% stake in the firm.
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