Planet Labs PBC (PL) experienced a sharp decline of approximately 22% in late-morning trading on Friday, with shares falling to $33.86. The drop came after the satellite-imagery company filed for a $1.5 billion at-the-market (ATM) stock sale program, sparking concerns about shareholder dilution.
The announcement overshadowed the company's solid quarterly results, which included record fiscal first-quarter revenue of $94.2 million, a 42% increase year-over-year. Planet also raised its full-year sales guidance, signaling strong operational momentum. However, the prospect of significant stock issuance weighed heavily on investor sentiment.
According to the filing, Planet has entered into equity distribution agreements with major financial institutions including Goldman Sachs, Morgan Stanley, Barclays, Citigroup, Deutsche Bank, BofA Securities, Needham, and Wedbush. The ATM program allows the company to sell up to $1.5 billion in Class A common stock directly into the open market, rather than through a traditional one-time offering. Planet retains flexibility under the plan, with no obligation to sell any shares and the ability to determine timing, quantity, and minimum price.
The company may also utilize range-forward sale agreements, a mechanism where banks borrow and sell shares to manage risk associated with future stock sales. This approach provides additional flexibility but could still lead to dilution if executed.
Despite the selloff, Planet's business fundamentals appeared strong. Revenue growth was driven by a 72% increase in backlog to over $906 million. The company ended the quarter with $730.8 million in cash, cash equivalents, and short-term investments. However, adjusted EBITDA remained slightly negative at a $1.0 million loss, and the company reported a net loss of $138.9 million, significantly wider than the $12.6 million loss a year ago. The net loss included a $106.5 million non-cash revaluation loss on warrants tied to the company's higher share price. Free cash flow was negative $2.5 million after capital expenditures.
CEO Will Marshall highlighted the "mission-critical nature" of Planet's data, citing Sweden's first sovereign reconnaissance satellite as a key achievement. President and CFO Ashley Johnson described the balance sheet as a "fortress" and emphasized the growing backlog as providing better visibility into future growth.
Looking ahead, Planet guided for second-quarter revenue between $102 million and $107 million, with adjusted EBITDA ranging from break-even to $5 million. For fiscal 2027, the company now expects revenue of $425 million to $441 million and adjusted EBITDA of break-even to $10 million. Capital spending is projected at $80 million to $95 million.
Government contracts remain a critical growth driver. Planet announced a $21.9 million one-year surveillance extension from the National Geospatial-Intelligence Agency, an additional crisis-response monitoring award, and a $7.5 million six-month renewal with the U.S. Navy.
The broader market also experienced weakness, with the SPDR S&P 500 ETF falling 1.4% and the Invesco QQQ trust declining 2.7%. Peer companies in the space and satellite sector also traded lower: Rocket Lab dropped 6.7%, AST SpaceMobile shed 10.3%, and BlackSky fell 11.4%.
Analyst opinions on Planet remain mixed. Needham analyst Ryan Koontz raised his price target to $53 from $40 while maintaining a Buy rating, suggesting that Wall Street's growth thesis remains intact despite the selloff. However, according to MarketBeat data, the stock has six Buy ratings, three Holds, and three Sells, with an average price target of $31.69—still below Friday's late-morning price even after the sharp decline. The divergence reflects concerns about valuation and the potential for further dilution if the ATM program is utilized.
The risk profile for Planet has undoubtedly shifted. If the company uses the ATM facility, additional dilution could pressure existing shareholders. If it does not, the filing itself may act as an overhang on the stock. Additionally, the company's margin outlook presents another challenge: second-quarter non-GAAP gross margin is expected to be 52% to 55%, down from 56% in the first quarter, as spending on satellites, artificial intelligence, and sales remains elevated.
