Shares of Planet Labs (PL 0.09%) have fallen over 40% this past month, dropping from an all-time high of about $51 in May to around $28.
The main reason for the space stock’s sudden slump has less to do with the company’s own financials and more to do with space-focused investors rotating capital out of existing satellite and data companies, such as Planet Labs, and into Space Exploration Technologies, or SpaceX, at its initial public offering (IPO).
The other reason concerns Planet Labs’ financials. It reported first-quarter fiscal 2027 earnings on June 4. While revenue was up 42% year over year to $94.2 million and the company grew its backlog to $906 million, up 72% over the same quarter a year ago, it posted a large net loss.
Planet Labs reported a net loss of $138.9 million vs. $12.6 million in the first quarter. However, a good portion, $106.5 million, was due to a one-time, noncash accounting adjustment tied to the appreciation of the company’s warrant liabilities.
Image source: Getty Images.
Why this is a buying opportunity
The stock’s price has fallen more to external factors than internal ones, and the need for global surveillance should drive revenue growth. The company ended the quarter with $730.8 million in cash, cash equivalents, and short-term investments, giving it plenty to fund its next-generation satellite constellations without selling stock, which would dilute its share price.
Today’s Change
(-0.09%) $-0.03
Current Price
$28.20
Key Data Points
Market Cap
$10B
Day’s Range
$26.34 – $28.68
52wk Range
$4.90 – $51.76
Volume
616.2K
Avg Vol
15M
Gross Margin
55.46%
That doesn’t mean there aren’t concerns. The company is several years away from profitability and trades at a high price-to-sales ratio of 26.9, especially compared to competitor Blacksky Technology at 10.3.
Geopolitical tensions are driving government contracts for Earth data. Planet’s Defense and Intelligence segment revenue grew more than 65% year over year in the first quarter. It recently locked in a $21.9 million extension of a maritime surveillance contract with the U.S. National Geospatial-Intelligence Agency and deployed Sweden’s first sovereign reconnaissance satellite just four months after signing the deal.
Considering all that, it’s likely the stock will bounce back, and buying at a low now could pay off.
James Halley has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends BlackSky Technology and Planet Labs PBC. The Motley Fool has a disclosure policy.
