Investors had mostly ignored Planet Labs PBC (NYSE: PL) since its IPO in late 2021. With the stock launching near the peak of a bull market, the stock struggled in the early part of its trading history.
However, that attitude changed last year, and the stock is up by more than 400% over the last 12 months. That recent surge leaves prospective buyers of the stock in a difficult position. Does the increase set the stock up for a near-term pullback, or is it the beginning of a long-term bull market in Planet Labs stock?
Image source: Getty Images.
The aforementioned stock gains are likely driven in large part by the competitive advantage the satellite imaging company offers. Before Planet Labs, users often had to deal with satellite images that could be months or years old.
That began to change in 2010 when three former NASA scientists founded Planet Labs. The company launched its first satellites within a few years and gradually built the capability to image the entire planet. Consequently, almost 200 satellites have helped Planet Labs amass a nearly 10-year archive of proprietary data. That allows users to access up-to-date images regardless of the geographic area of interest.
Although Planet Labs is not the only Earth imaging company, it is the only one that photographs the entire planet as frequently. According to the company, this ability gives it a total addressable market (TAM) of $128 billion.
So far, Planet Labs has barely scratched the surface of that potential. In the first nine months of 2025, the company earned $221 million in revenue, a 21% increase from the same period in 2024.
Nonetheless, while it reduced operating expenses by 7%, these expenses exceeded revenue by a wide margin. Also, thanks to a $39 million loss resulting from a change in the fair value of warrant liabilities, its net loss was $94 million for the first three quarters of 2025. Planet Labs lost $88 million in the same year-ago period.
Admittedly, with its free cash flow of $59 million during the first nine months of 2025, investors may be dismissing the net losses. Still, the rising stock price may give new investors pause.
Also, Planet Labs is not expected to earn a profit in the foreseeable future, leaving it without a P/E ratio. Today, the price-to-sales (P/S) ratio has reached 23. Over its history, it has had an average sales multiple of only 5, meaning the stock sells at a huge premium.
Indeed, the aforementioned stock price increase, which led to the high valuation, is a sign that the market now recognizes the growth potential of Planet Labs. However, with the valuation significantly above historical averages, investors may need to approach this stock with caution if they decide to buy.
Given its TAM and current revenue levels, it is likely not too late to buy Planet Labs stock. Since revenue levels indicate it has capitalized on less than 1% of its TAM, the remaining growth potential is likely tremendous.
Nonetheless, the recent spike in the stock price indicates this is not a time to make aggressive purchases of the stock. With most of the stock’s all-time gains occurring in the last four months, it is too early to tell whether the rising stock price is the beginning of a bull market or a temporary move that the stock will not sustain.
To address this uncertainty, investors should probably only deploy small percentages of their capital if they choose to buy now. That leaves investors able to profit from gains should they continue. Conversely, if the stock pulls back, prospective buyers will have capital available to buy more shares at a lower price.
Whatever happens in the near term, Planet Labs’s future hinges on the TAM and how little of it the company has realized. That means that no matter when one buys, investors should win with this stock over the long term.
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Will Healy has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
