Planet Labs Stock Is Down 67% From Its High. Time To Buy?

Planet Labs (NYSE: PL) stock had been on a meteoric rise amid its rapid growth and high demand for its up-to-date Earth images. Unfortunately, after peaking in May, the stock reversed course and gave up about 67% of its value.

Despite the decline, the sell-off has continued and shows no obvious signs of bottoming. Amid those conditions, should investors begin to buy or remain on the sidelines?

Image source: The Motley Fool.

Assessing Planet Labs and its stock

Planet Labs has developed a service that is hard to replicate. Unlike its competitors, its satellites photograph the planet's surface daily, providing its customers with up-to-date imagery. Before Planet Labs, users would have to turn to images that could be months or even years old.

Consequently, organizations can now react in real time to environmental, infrastructure, or geopolitical events. Additionally, the technology can process the data faster, allowing users to devote more time to analysis. This has become a more valuable resource as the company has now collected about 10 years of data.

Also, since government contracts power revenue growth, it likely does not surprise investors that its revenue for the first half of fiscal 2027 (ended July 31, 2026) was $210 million, up 44% from the same period in 2025.

Also, while it lost $148 million in the first two quarters of fiscal 2027, a change in the fair value of warrant liabilities accounted for $106 million of that loss. Fortunately, it also generated more than $21 million in free cash flow, meaning its "loss" comes from non-cash expenses.

Still, these attributes did not make Planet Labs free of problems. Investors balked at the $1.5 billion equity dilution program the company announced in June to raise capital. Also, cautious revenue guidance in Q3 may have made investors question its high price-to-sales (P/S) ratio, which peaked at 49 back in June.

However, thanks to the pullback, the P/S ratio has fallen to 15, a level comparable to its valuation before the recent surge in the stock price. Also, while growth may slow, analysts forecast 42% revenue growth in this fiscal year and 31% in fiscal 2028.

Investors tend not to react well to slowing growth, even when it remains strong. Still, considering the recent drop in the stock price, that growth may be compelling enough to bring investors back to Planet Labs stock.

Is it time to buy Planet Labs stock?

Given Planet Labs' current conditions and stock price, investors could justify some cautious buying.

Admittedly, the stock has not stopped falling, and a 15 sales multiple is not cheap. Thus, prospective shareholders should consider a dollar-cost averaging approach if they decide to buy.

Nonetheless, Planet Labs is the only company imaging the Earth on a daily basis, and its rapid revenue growth speaks to the demand for its images. That should help the company maintain higher growth rates and bring about an eventual recovery in the tech stock's price.

Will Healy has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Planet Labs PBC. The Motley Fool has a disclosure policy.