Planet Labs (PL) shares continued their steep decline last week, hitting the lowest level since March 19. The stock has now dropped 50% from its 2025 peak, with market capitalization shrinking from over $18.4 billion in May to approximately $9.3 billion. Technical indicators suggest additional downside may be ahead.
The selloff in Planet Labs is part of a broader reversal across the space sector. SpaceX stock has fallen to record lows following its IPO, while Rocket Lab has declined 47% from its year-to-date high. The Procure Space ETF (UFO) has dropped from $68.3 to $46 over the same period.
Revenue Growth Fails to Stem the Tide
Planet Labs reported strong first-quarter results, with revenue jumping 42% year-over-year to $94.2 million. The company's recurring annual contract value (ACV) now represents 99% of total revenue, indicating a stable subscription-based business model.
Gross margin softened slightly to 54%, while net loss widened to $138.9 million from $12.6 million a year earlier. The loss increase was primarily driven by a $106 million non-cash revaluation loss related to warrant liabilities tied to stock appreciation.
Analysts expect continued momentum, with second-quarter revenue projected at $104 million (up 42%) and full-year revenue of $436 million, followed by $570 million in the next fiscal year. Growth is expected to be fueled by the Pelican-11 satellite, designed to enhance image quality and validate new technologies for government and corporate clients.
Dilution Fears Weigh on Sentiment
Despite the positive operational trends, investor sentiment has been dampened by Planet Labs' equity distribution plan, which allows the company to sell up to $1.5 billion of Class A common stock over time. This has raised concerns about shareholder dilution, reflected in a short interest of 12.4%.
The broader space sector has also been under pressure as investors rotate out of high-growth names following the SpaceX IPO valuation debate. The Procure Space ETF's decline underscores the widespread nature of the pullback.
Technical Analysis Points to Further Weakness
Planet Labs stock has been in a freefall since May, dropping from $51.60 to the current $26 level. The price is attempting to break below the key support at $26.25, which would invalidate a potential double-bottom pattern. The 50-day and 100-day exponential moving averages are nearing a death cross, a bearish signal.
If support fails, the next major level is $20, representing an additional 23% decline from current prices. However, some analysts anticipate a rebound later this year as investors rotate back into space stocks.
For context, the broader market has been volatile amid geopolitical tensions, with chip stocks plunging on helium supply concerns and the Dow opening higher despite sector-specific weakness.
This article is for informational purposes only and does not constitute financial advice.
