Why Planet Labs Stock Sank Today

Key Points

• Planet Labs made some bold predictions five years ago -- and missed on most of them.

• Planet Labs beat on earnings yesterday, however, and is generating positive free cash flow.

• The stock's valuation is better today than it was five years ago.

• 10 stocks we like better than Planet Labs Pbc ›

Earth observation satellite company Planet Labs (NYSE: PL) stock started out the week right as it soared nearly 48% after beating earnings Monday morning. It's giving back some of those gains Tuesday, having fallen back 3.9% through 10:40 a.m. ET.

And that's OK.

Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Learn More »

Image source: Getty Images.

Planet Labs Q2 earnings

If you recall, Planet Labs reported $0.07 in losses yesterday but beat analyst forecasts for "adjusted" earnings, and for revenue according to generally accepted accounting principles (GAAP) as well. Revenue growth was strong at 20% year over year, and gross margins were exceptional, rising 5 full percentage points to 58%.

Best of all was Planet Labs' announcement that it is firmly free-cash-flow positive, and sooner than Wall Street expected (if not quite as soon as Planet Labs promised before it came public via a special purpose acquisition company years ago).

What Planet Labs said, and what Planet Labs did

Back in 2021, Planet Labs made some predictions about where it would be today, in its fiscal 2026. Right about now, Planet Labs predicted, it would be earning 74% (non-GAAP) gross margins, growing revenue at a consistent rate north of 50% annually, and firmly free-cash-flow positive.

So far, only one of these predictions has come true, and only partially so: Free cash flow arrived a year later than predicted. Sales growth and profitability are both tracking lower than predicted -- but as I said, that's OK.

Why? Because Planet Labs stock costs less today than it did back at its IPO. Valued at $2.9 billion, on course for perhaps $100 million in FCF this year, and growing at 20%, the stock's close enough to the mark that investors can once again seriously start looking at Planet Labs as a stock worth buying.

Should you invest $1,000 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 $671,288!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,031,659!*

Now, it’s worth noting Stock Advisor’s total average return is 1,056% — a market-crushing outperformance compared to 185% for the S&P 500. Don’t miss out on the latest top 10 list, available when you join Stock Advisor.

See the 10 stocks »

*Stock Advisor returns as of September 8, 2025

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.