Reasons for the Decline in Planet Labs Stock Today

Five years back, Planet Labs made some ambitious forecasts but hasn’t really hit the mark with most of them.

Still, they managed a positive revenue update recently and generated positive free cash flow.

In fact, stock valuations are looking better today than they did half a decade ago.

Planet Labs (NYSE: PL) saw its stock jump nearly 48% on Monday after announcing they exceeded revenue expectations. However, by Tuesday morning, it had dipped 3.9% by 10:40 AM.

And that’s perfectly okay.

They reported a loss of $0.07 recently, yet managed to surpass both adjusted revenue projections and those based on generally accepted accounting principles (GAAP). Year-on-year revenue growth was impressive at 20%, with total margins rising significantly to 58%.

Crucially, they mentioned strong positive free cash flow, although it was a promise that took longer to fulfill than initially expected when they transitioned via a special purpose acquisition company.

Looking back at 2021, they projected some figures for 2026. Now, they’ve achieved a total margin of 74% (non-GAAP) and are consistently increasing revenues at about 50% annually, all while being cash flow positive.

So far, only that one prediction—a positive cash flow—arrived a year later than they anticipated. Sales growth and profitability, unfortunately, haven’t met earlier expectations, but, as I mentioned, that’s acceptable.

Why? Well, the stock actually costs less today than it did at the time of the IPO. This year, it looks to be valued at around $100 million in free cash flow, $2.9 billion overall, and with a growth rate of 20%. So, investors might find this stock attractive again.

It’s something to ponder before diving into an investment in Planet Labs PBC.

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