Why Planet Labs Stock Shot to the Moon Today

Planet Labs (NYSE: PL), a small space stock that owns one of the world's biggest constellations of Earth observation satellites, exploded higher after beating on earnings last night.

Heading into the fiscal Q1 2026 earnings report, analysts expected Planet to report a $0.03-per-share adjusted loss on sales of $62.3 million. Instead, it reported $66.3 million in sales and break-even profits. Investors applauded, sending the stock up 52.1% through 1:50 p.m. ET.

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Planet Labs' Q1 earnings

The $66.3 million set a new quarterly sales record for Planet Labs, and was up 10% year over year, with 97% of the revenue recurring. Gross profit margins expanded from 52% a year ago to 55% this time around.

The company still lost money when earnings are calculated according to generally accepted accounting principles (GAAP) -- $0.04 per share -- but Planet's non-GAAP result was a wash at $0.00 earned. Best of all, Planet Labs for the first time ever reported positive free cash flow for a quarter: $8 million.

Is Planet Labs stock a buy?

Now the question is: Can Planet Labs keep up the good work?

CFO Ashley Johnson thinks so, advising that "We continue to have good visibility to meaningful revenue growth rate acceleration." Fiscal Q2 sales are projected to be about $66 million, roughly flat sequentially, but up about 8% year over year. Earnings are likely to be negative, though, and free cash flow as well.

For the full fiscal year, Planet sees sales growing between 9% and 15%, to $265 million or even $280 million. I suspect earnings and free cash flow will still end up negative for the year, but Planet's getting closer to sustainable free cash flow -- and more and more deserving of a buy rating.

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Rich Smith has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.