Planet Labs Has Fallen Back to Earth, But Wall Street Still Sees a Rebound

Key Points

• Planet Labs has fallen more than 60% from its 2026 high even as revenue growth has accelerated and operating metrics have improved.
• Planet Labs delivered record Q2 revenue of $116.1 million, but part of the beat came from a satellite handover that occurred earlier than expected.
• Planet Labs still carries a premium valuation after its sell-off, while analyst price targets point to substantial upside if the company can sustain growth and convert more of its pipeline into backlog.

Like a rocket that must eventually come back down to Earth after takeoff, space and satellite stock Planet Labs PBC NYSE: PL has plummeted from its heights. Through the end of May, PL had risen nearly 160%. The stock had reached a market capitalization of more than $18 billion, despite generating sales of only $307 million in the last 12 months at that point.

Shares have now declined even faster than they rose at the start of the year. Planet Labs’ 2026 gains have completely vanished, with shares now down roughly 15% year-to-date. Compared to its 2026 high, Planet Labs has fallen more than 60%.

However, this move is more a function of a stock that had gotten ahead of itself, rather than one posting deeply disappointing financial performance. Amid this, Wall Street analysts are now forecasting a large rebound, indicating a potential opportunity going forward.

The Q1 Report That Turned the Tide

Planet Labs recently posted its Q2 fiscal year 2027 (FY2027) earnings report, but understanding the path of this name requires going back one quarter. Its Q1 FY2027 report marked the point when the market began punishing the stock despite continued business growth.

In that Q1 report, Planet Labs posted revenue of over $94 million, up 42% year-over-year (YOY), and beat estimates by over $3 million. Its loss per share of 3 cents was better than expected. Its backlog surged 72% YOY to $906 million, and the firm raised its full-year revenue guidance. Despite this, shares tanked 26% the next day. Since then, the stock has plummeted by almost another 50%.

Trading at a forward price-to-sales (P/S) ratio of over 30x going into its report, posting anything other than massive beats equated to an untenable valuation. Investor expectations had gotten ahead of the company’s results, and shares have continued to fall as that valuation reset played out. The latest quarter provides a clearer picture of where the business and stock stand now.

Planet Labs Crushes Q2, But With a Caveat

In fiscal Q2 2027, Planet Labs’ financial performance was even stronger than in the prior quarter. Revenue soared over 58% YOY to a record $116 million, this time beating estimates by over $11 million. This was the firm’s highest revenue growth in four years. Additionally, the company swung from a loss per share of 7 cents in the prior year to earnings of 2 cents per share, well ahead of the expected 2-cent loss. The company also saw its Rule of 40 Score improve to 70, versus 41 last quarter and 29 a year ago. It calculates this by adding revenue growth to its adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) margin of 12%.

However, there was a notable caveat to its strong quarter. Its sales outperformance was partially due to handing over a satellite to a customer during fiscal Q2, rather than its expected timeline of fiscal Q3. As timing rather than demand drove this, the company only slightly raised the low end of its full-year guidance. It now expects midpoint sales growth of 41.5%, up from 41% last quarter.

Meanwhile, its backlog fell 10% sequentially despite rising 11% YOY to $815 million, as new orders did not fully replenish deliveries. Despite posting many impressive metrics, shares fell more than 1% after the report. This further reflects how moderate earnings blemishes can cause negative reactions for this still high-multiple stock.

Analysts Eye Huge Rebound, But Planet Labs Still Isn't Cheap

Planet Labs now trades at a forward P/S sales ratio near 12x. Notably, this figure has come down more than 70% from its highs, but it is not low by any means. For reference, Planet Labs' forward P/S ratio still ranks in the top five highest among nearly 200 industrial stocks in the Russell 1000 Index. Thus, although its valuation indicates less risk than in the past, in the grand scheme, risk is still palpable.

However, Wall Street analysts are clearly bullish on the stock’s outlook, with the MarketBeat consensus price target of $32.78 implying upside of well over 90%. Additionally, the average of targets updated after its report is slightly higher, above $33.

Looking ahead, one key watch item will be Planet Labs' ability to convert its over $4 billion pipeline into orders. Within this, it classifies $1 billion as being "near-term," seeing potential to convert this portion in the coming quarters rather than years. With its backlog currently at $815 million, converting a significant percentage of its near-term pipeline could materially improve its backlog and, in turn, revenue visibility.

Planet Lab’s growth to this point has demonstrated its ability to succeed in the satellite and imaging market. However, whether this success will continue at a rate that satisfies markets is an entirely different question, and one filled with uncertainty. In turn, taking a cautious approach with this stock remains paramount.