2Mon·

Crazy Sale

$RHM (-3.34%) is currently falling toward €1,000, as it appears the federal government’s frigate contract will go to TKMS after all. If I understand correctly, Rheinmetall will then be left with a shipyard without any orders. The frigate contract would have been worth up to 15 billion euros. In addition, there appear to be concerns that the federal government is awarding too many contracts to individual companies. However, on Monday, Papenberger purchased shares worth 4 million euros through his holding company at a price of 1,160 €. It seems the loss of the contract really wasn’t foreseeable after all. I only have 3 shares left (I sold the rest at around 1,300 €), so it’s very frustrating to lose 12% on this stock intraday.

26 Comments

Chris@Multibagger

2Mon

At €800, it would once again be attractively priced for first-time buyers.

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jkb92@jkb92

2Mon

@Multibagger That's how it looks. There's still a gap to close, and once that's done, it could stabilize.

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Julien@HappyJulienDay

2Mon

I'm seriously considering buying two stocks because I'm still missing an industrial stock anyway. Do you think the price will really drop any further? Investing Pro says it's fairly valued and has 8% upside potential until it reaches a fair valuation.

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Jakob C.@Creutzfeldt_Jakob

2Mon

@HappyJulienDay For now, I'd wait for the stock to at least find a short-term bottom. It's plummeting right now, so I wouldn't jump in right in the middle of it.

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Chris@IronEagle

2Mon

@HappyJulienDay It's difficult—we don't yet know the consequences of the alleged loss of the major naval contract. In the worst-case scenario, Rheinmetall could end up with a shipyard without any orders. That could prove costly. Before the defense industry boom, shipyards in Germany weren't in high demand.

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jkb92@jkb92

2Mon

@HappyJulienDay So, from a purely technical perspective, the correction following the formation of the top is still underway. Of course, this could also have been the bottom—for example, the low from April 25. To me, there’s more evidence suggesting it will drop another notch toward €800: 1. today’s sharp sell-off, 2. an upward gap just above €800, 3. the 200-week moving average runs through the ~€800 level, and 4. there’s also higher volume at that level. I haven’t analyzed the stock from a fundamental perspective.

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Chris@IronEagle

2Mon

@jkb92 I still don't understand technical analysis :-) If Rheinmetall ends up getting the naval contract after all, the stock will go up, regardless of any technical analysis limits. Does technical analysis work in the long term, or is it just for trading?

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jkb92@jkb92

2Mon

@IronEagle That’s a matter of belief. There’s a great podcast from “Wir lieben Aktien” with Adrian explaining why this works. If you’ve taken a look at the past few months on $RHM, you can see, in my opinion, that technical analysis works. There’s been a pretty good news flow, and yet the stock has kept falling—hitting new lower lows and lower highs. In my opinion, it also works because so many people stick with it. “Smart money” simply wouldn’t buy near all-time highs; they often buy when others are running away from the stock. That’s how they slowly stabilize the price; then the trend reverses, and only once it’s already gone up quite a bit do retail investors start jumping back in. And if you take a look at technical indicators like the RSI and study them, I simply wouldn’t buy a stock that I intend to hold long-term (i.e., not for short-term gains) if it’s heading toward overbought territory, because when you look at stocks over the long term, they all eventually return to their 200-week moving average—or at least approach it.

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jkb92@jkb92

2Mon

@IronEagle Sorry, that was really long and a bit all over the place. Here’s the podcast: https://open.spotify.com/episode/0nmEiP8Ipq1uwl1u3wTxO8?si=8q9WRRBVSE-K3sNK36rKlg

There will be plenty of people who’ll always tell you that it’s voodoo, but they don’t have any real arguments or examples to disprove it. You just have to form your own opinion. I’m not trying to convince or convert anyone against their will, but if someone asks me, I’m happy to share my perspective. I used to think it was nonsense, too, and unfortunately I still have a few “dead weight” stocks in my portfolio from that time—stocks I’m fundamentally convinced are good, but I just bought them at the wrong time.

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jkb92@jkb92

2Mon

@IronEagle And one last thought on this: if $RHM does end up getting the contract, the stock will definitely go up. The question is, though, whether it will be enough for a new high, or just a rebound before it goes down again. That’s technical analysis. For me, it’s not about always buying at the exact bottom, but rather about identifying areas where I think a reversal is likely.

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Chris@IronEagle

2Mon

@jkb92 Thank you so much! That really helped me a lot. I’ll still tend to buy and sell based on fundamental data (and, of course, always make the wrong decision :-) ). But maybe I should pay more attention to technical analysis after all.

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View all 6 further answers

Markus@_xempex_

2Mon

My savings plan is still going strong, and I'm glad I'm getting more bang for my buck again.

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Chris@IronEagle

2Mon

@_xempex_ So if stock prices just keep falling, would you actually be happy? :-) I have savings plans too, but I've never quite understood the logic behind them. At some point, prices have to go up so that buying through a savings plan actually pays off.

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jkb92@jkb92

2Mon

@IronEagle It’ll go up again anyway. But if you hold onto it for the long term and are fundamentally convinced of the company’s potential, then you’re happy to get a discount. I would have reactivated my savings plan at $RHM now, at the earliest. But when you’re shopping, you’re also happy when products are cheaper.

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Markus@_xempex_

2Mon

@IronEagle No, I'm convinced that it will go back up in the long run, and I'm happy to ride out this phase. What you’re accusing me of is completely unnecessary and, of course, totally meaningless. I’m well aware that a stock has to go up again and that a savings plan is pointless if the stock is heading toward zero in the long run.

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Chris@IronEagle

2Mon

@_xempex_ I didn't mean any harm; I'm not accusing you of anything, and I'm sure you're following a sound strategy—no hard feelings, as my kids would say :-) . But I see this every time stock prices plummet. Of course, you can buy back in at a lower price now, but you don’t know how long it’ll take to get back to a somewhat normal level. And unfortunately, the portfolio is simply worth significantly less now, and it’ll take longer for it to return to its previous highs. A small correction is okay, but a 20% drop doesn’t necessarily mean prices will soon rise back above the level they were at before this slump.

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Markus@_xempex_

2Mon

@IronEagle That sounds a bit different from your first comment! :) Of course, that’s true. However, I still have at least 20 years until retirement, and by then I’m convinced the stock will be in better shape again. And if I can buy more now at 1,000 EUR per share, I’ll be happy. But of course, that’s assuming the stock will rebound in the long run. The company’s balance sheet is solid, and its profits are secure in the long term, even without that shipbuilding contract.

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Powell@TheRealPowell

2Mon

I’m still optimistic! Rheinmetalle has invested heavily and is now focusing on ramping up all its investments and working through its order backlog. I think the cash flow is still to come. They have plenty of orders. I could also imagine Rheinmetalle becoming the top supplier to the military across all of Europe. But what do I know? I’m continuing to buy in tranches as well!

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Der O.@MMeier

2Mon

Well, I already mentioned how much I bought in for. I ended up selling at 1,230 in Schwerzen. I'm glad I did today. But 800 would be a price where I'd start thinking about it again.

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Chris@IronEagle

2Mon

It is now official that the Bundeswehr, or more specifically the Navy, is abandoning the F126 frigate project (https://www.bundeswehr.de/de/meldungen/beendigung-ruestungsprojekt-fregatte-f126-6115992). If Rheinmetall had factored these revenues into its plans, this is of course a major blow. I don’t know for sure, though. If that’s the case, then the price could indeed fall even further, and it might be possible to buy in again at €800. However, given the sell-off that has already taken place, a 15% drop today seems like enough for now.

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