Why Planet Labs Stock Is Plummeting Lower This Week
Key Points
Planet Labs' stock had risen eightfold over the last year before a recent decline.
The market priced the stock for perfection, and today's Q1 results were excellent, but not "perfect."
Capitalizing on Planet Labs' soaring share price, management announced a $1.5 billion equity offering, which also weighed on the stock today.
- 10 stocks we like better than Planet Labs PBC ›
Shares of the leading Earth observation satellite services company Planet Labs (NYSE: PL) are down 35% this week after the company reported first-quarter earnings and announced an equity offering on Friday. Starting with Planet Labs Q1 earnings -- things weren't nearly as bad as this week's decline might suggest. The company:
- increased sales by 42%
- grew its backlog by 72% to over $900 million
- maintained a solid net dollar retention rate of 114%
- continued to generate positive cash from operations
- raised its full-year guidance to grow revenue by 41%
However, if you type "priced for perfection" into your favorite LLM, it might generate a picture of Planet Labs' stock chart after its shares rose eightfold over the last year, before this week's decline.
Will AI create the world's first trillionaire? Our team just released a report on the one little-known company, called an "Indispensable Monopoly" providing the critical technology Nvidia and Intel both need. Continue »
The market wanted extraordinary results from Planet Labs, but it earnings were "only" above average, which helped spur today's decline. It simply had very lofty expectations.
Image source: The Motley Fool.
Making matters worse, management announced a $1.5 billion equity offering today alongside earnings, which, if fully executed, could dilute shareholders by 9%. So some of today's decline also comes from that. While it does dilute value somewhat today, I'd argue that it is a brilliant move from management, as they can raise funds from the company's skyrocketing share price over the last year. Rocket Lab held a similar equity raise as its share price rose over the last year, and this can prove to be a shrewd move for growth stocks, provided what they spend the money on is a sound investment.
Ultimately, Planet Labs remains a fascinating stock in my eyes. It is sending Nvidia AI compute power to space to process imaging at the satellite, saving money on the vast amount of data and imaging that previously had to be beamed back to Earth. However, Planet Labs still trades at 32 times sales -- even after today's decline. As it wrestles to improve profitability over time, the stock will undoubtedly remain volatile at this lofty valuation. Interested investors should buy in small batches over time rather than going "all-in" at today's valuation.
Should you buy stock in Planet Labs PBC right now?
Before you buy stock in Planet Labs PBC, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Planet Labs PBC wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $439,847!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,342,065!*
Now, it’s worth noting Stock Advisor’s total average return is 968% — a market-crushing outperformance compared to 211% for the S&P 500. Don't miss the latest top 10 list, available with Stock Advisor, and join an investing community built by individual investors for individual investors.
See the 10 stocks »
*Stock Advisor returns as of June 5, 2026.
Josh Kohn-Lindquist has positions in Nvidia and Rocket Lab. The Motley Fool has positions in and recommends Nvidia, Planet Labs PBC, and Rocket Lab. The Motley Fool has a disclosure policy.
Recommended Articles
