Why Planet Labs Stock Popped Today

Planet Labs (NYSE: PL) stock announced this morning it has signed a "9-figure deal with Sweden."

The stock jumped 6.2% through 11:15 a.m. ET Monday in response.

Image source: Getty Images.

Planet Labs is looking up

For the third time in a year, Planet Labs has signed a "major satellite services contract" with a foreign government, this time with the Swedish military (Japan and Germany were the previous counterparties). The company will "rapidly deliver a suite of satellites, space-based data and awareness solutions to support the country's peace and security operations."

What's curious about this announcement is the first part of that description: Planet will "deliver" satellites to Sweden. More than just selling data collected by its satellites, in the instant case, Planet Labs confirms Sweden wants to actually buy some of its satellites (in addition to paying for data). The country will literally "own a suite of Planet's cutting-edge satellites," says Planet.

What this means for Planet

Is it better to sell satellites or to own them and generate recurring revenue from the data they produce? That's an open question. Own them... and you have to pay to replace and upgrade them over time, incurring capital costs. Sell them, though, and you've arguably created a brand new revenue stream selling entire satellites to a customer!

And it appears Planet is now getting the best of both worlds.

Management noted the new deal will be "multi-year" (it didn't say how many), and worth "low 9-figure." By my count, that means $100 million, minimum. Spread over, say, 10 years, that's at least another $10 million in annual revenue -- enough to move the needle for a company that did just $282 million in revenue over the past year.

And the shorter the contract, the more this needle will move.

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.