There aren’t too many industries that appeal to investors right now. The stocks of defense companies have been a notable exception in recent years. Anyone who recognized the signs of the turning point early enough was able to participate in the incredible rise in Rheinmetall shares, which peaked at almost 2,000 percent. Until the Russian war of aggression, an absurdly rigid interpretation of the ESG criteria had blocked the financing of many defense companies. Since this madness was recognized and stopped, the doors have also been open to many institutional investors. Recently, however, developments have been rather sideways – albeit at a high level. Is the high already over?
Which start-up will make the breakthrough?
The European NATO states will have to arm themselves significantly in the coming years; budgets worth billions have already been approved for this. Now a defense industry – which is deliberately kept small in Germany – has to scale up like hell, i.e. produce products in previously unknown quantities. This requires a lot of capital. Anyone who makes this available can expect very decent returns in the future.
But start-ups going public are by no means a sure-fire success. In recent years, software-driven drone manufacturers have mushroomed in this country, and a new genre has emerged. But soon the wheat will be separated from the chaff: which of these new players will make the leap into the top league of defense companies and offer their own systems? The role models from the USA are called Anduril and Palantir, which, despite their young age, are already making billions in sales. The rest can either set up as suppliers or rely on a takeover that is, at best, lucrative.
