Rheinmetall AG (RHMG.DE) shares fell sharply on Thursday, dropping approximately 16% in early trading as concerns mounted that the German government may cancel the F126 frigate program.
The steep decline marks a continuation of the selloff that began Wednesday, when the stock tumbled 13% following initial reports of the program's termination.
The move to scrap the planned construction of the new frigates has sent shockwaves through the European defense sector, with investors reassessing the revenue outlook for key contractors involved in the project.
The cancellation decision by Federal Defense Minister Boris Pistorius stems from exploding costs and significant delays in the F126 program, which was intended to be the largest naval procurement project in the history of the German Navy.
The abrupt end to the contract represents a major setback for Rheinmetall, which had positioned itself as a central player in the modernization of Germany's maritime defense capabilities.
The loss of this high-value contract is expected to weigh heavily on the company's near-term earnings guidance and long-term growth trajectory.