rewrite this title Planet Labs Stock Shoots to the Moon – Nanalyze

Space stocks have taken off on the back of both hype and substance. Investors don’t even bat an eyelid at astronomical valuations for companies with a track record of broken promises longer than the Pacific Coast Trail (cough, $ASTS, cough). It’s hard to deny the vast potential of many so-called “NewSpace” stocks shooting things up into space for any number of purposes – from datacenters to asteroid mining. As a result of this mad scramble there are now over 15,000 satellites orbiting the earth and 300 rockets launching each year. And with SpaceX reportedly planning to hit the market at a $1.5 trillion valuation, it’s expected that space stocks will get even more attention. Just a handful of these names we find compelling, and one of those is Planet Labs $PL.

Planet Labs Stock Moons

For over seven years now we’ve been tracking Planet Labs, a leader in the field of geospatial intelligence. The business model involves using satellites to take pictures of earth to monitor anything from weather patterns to military troop movement to city planning. Our previous check-in with the company left us puzzled. On one hand, their revenue growth was accelerating due to a large contract with a major satellite operator and a shiny, new partnership with Anthropic. The company also achieved its first quarter of positive adjusted EBITDA, which is a fancy accounting term that basically says “here’s how much money we could have made if we didn’t have to pay for certain things we had to pay for.”

On the other hand, Planet was still burning cash while consistently missing their own guidance. Consequently, that poor execution came with a reasonable valuation – a simple valuation ratio (SVR) of just 5. Fast forward a year and that has changed dramatically after a more than +500% rally in the stock price versus a +25% run in the Nasdaq. When share prices moon but fundamentals don’t, this is what happens.

When you see similar valuation spikes across the board for space stocks, it’s a classic example of thematic hype. As sure as death and taxes, one of two things will happen. Either the company’s fundamentals will catch up with a rapid improvement in revenue growth and profitability metrics, or the share price will plummet down to earth.

A Boost from Defense and AI

Stocks don’t increase 500% in value in a year for no reason. One contributing factor is the hype we’re seeing across all space stocks such as Rocket Lab $RKLB with a simple valuation ratio of 57, or AST SpaceMobile with an SVR of 166. But there are also some Planet-specific stories fueling the hype: largely defense and AI. In the past year, Planet secured three satellite services contracts valued at roughly half a billion dollars, as well as another “nine-figure agreement” with the Swedish Armed Forces. While geopolitical uncertainty is never a good thing, Planet is making hay while the sun shines and capitalizing on countries’ needs for additional security. Want to keep an eye out to ensure your global enemies aren’t invading? Geospatial intelligence can help.

As far as AI goes, the company is touting their new “Planet Analytic Feeds” which use machine learning and computer vision to do things like detect and label earthly objects from space. It can also identify environmental anomalies which can be useful for construction or government entities that want to avoid damaging the ecosystem with their operations. Each of Planet’s Pelican satellites is equipped with NVIDIA chips for “edge” computing, meaning all the number crunching is performed in space, rather than in a data center somewhere. That’s great and all, but does it translate to growth? Yes, it does.

Planet just released their 2025 year-end results and realized 26% growth which handily beat their guidance of 22%. Looking forward, the midpoint of Planet’s 2026 (Fiscal 2027) revenue guidance points to 39% growth – a dramatic acceleration. Net retention rate has jumped from 103% last summer to 116% more recently which shows existing clients are spending more. “Defense and Intelligence” now makes up over half their revenues, though we’d much prefer commercial revenues to dominate (they currently represent just 18% of total revenues). The former could be heavily impacted by governmental administration changes while the latter should be more stable.

When breaking out their revenues on a quarterly basis, we see nice smooth consistency and a clear trend upwards over the past year. That can be attributed to 87% of their annual contract value being annual or multiyear contracts, with the average duration being around two years.

A forward-looking valuation makes Planet look a bit less overvalued, but still lofty. With a market cap of around $11 billion, and our forecasted Fiscal 2027 Q4 revenues of $480 million annualized, that’s roughly an SVR of 23, which is significantly above our catalog average of around seven. That premium valuation reflects the strong growth prospects and massive hype we’re seeing across nearly all space stocks. With their stock priced to perfection, any disappointments will be punished severely.

Revenue growth is always the ground truth when it comes to disruption, and it’s clear Planet is truly disrupting. The earnings deck reiterated the same drivers they spoke of before – large government sales opportunities, AI-enabled solutions, and more satellites being launched after a successful 40 satellites were launched last year. (AST Spacemobile, take notes here.) The best part is that they’re investing even more into their satellite constellation next year, and the funding for that will come from positive operating cash flows.

Getting to Cash Flow Positive

Planet generated positive free cash flow in 2025, assuaging our cash-burn fears. The company now holds a cash stockpile of over $640 million with no long-term debt other than the $400 million of convertible notes coming due in 2030. However, Planet can likely cover that with the cash generated from their operations. They could alternatively let the notes convert into equity, which would dilute current shareholders, but may be preferable if shares continue to trade at high multiples.

Planet expects $80-$95 million in capital expenditures for this year, which reflects more investments in next-generation satellites, and they talk about building satellites that cater to particular customers. Perhaps that’s what’s driving all the visibility into coming revenue growth. They’re building satellites now that will shortly result in recurring revenues over time.

Our original attraction to Planet was that they were a high-margin software business, but it’s also looking like they’re moving into custom hardware configurations. Provided they can keep those margins floating around the 60% level, we’re happy either way.

On an annual basis, the company expects to operate their business in a free cash flow positive manner going forward through contracts that require customers to make upfront milestone payments that fund the needed capex. Strong demand is said to be coming from Europe where many sovereign states are considering deploying their own satellites to manage through all the geopolitical instability we’re seeing. It’s a good reminder to not get too carried away with hype. While lots of flashy press releases are being thrown about partnerships with Google, NVIDIA, and Anthropic, that’s not what’s paying the bills right now. In fact, AI could even pose a threat.

In the latest earnings call, Planet talked about how their full-stack geospatial imagery platform might even be disrupted by AI when, “anyone can turn up, build their own bespoke application of equivalent fidelity in short order.” Management wants us to think about this being an opportunity – an expansion of total addressable market that’s being unlocked – but it’s also a potential move towards more data commoditization. If everyone can quickly build their own custom analytical platforms, Planet only gets paid for their images, not additional value add. That’s why leaning into AI and partnering with leading technology providers will perhaps provide ways to turn any potential AI headwinds into tailwinds.

Conclusion

Space stocks appear largely overvalued across the board because of excitement around emerging themes like data centers in space, satellite-powered direct-to-cell broadband networks, and, of course, the exciting SpaceX IPO that’s expected to happen this year. Since their SPAC debut, Planet’s value proposition has been evolving. They’re now emerging as a play on defense more than commercial. We’re just happy to see the strong growth acceleration following a stall several years back. Since our thesis hasn’t changed and growth is continuing, there’s nothing else to do but wait a year and check back in to make sure growth continues in Fiscal 2028.