Valuation Surge and Market Timing: Should You Enter Planet Labs Now?

The Current Market Landscape

Planet Labs PBC (NYSE: PL) has experienced a remarkable transformation in investor sentiment. Once largely overlooked since its IPO in late 2021, the satellite imaging company’s stock has surged over 400% in the past 12 months. This dramatic appreciation presents an interesting puzzle for potential investors: is this momentum the start of sustained growth, or a warning sign of an impending correction?

The stock’s recent gains reflect growing recognition of Planet Labs’ fundamental strengths, yet the timing raises legitimate questions about entry points and valuation multiples.

Competitive Edge in Earth Observation

At the core of Planet Labs’ appeal lies a distinctive capability that few competitors can match. The company operates nearly 200 satellites, enabling it to photograph the entire planet on a daily basis—a feat unmatched by rival Earth imaging firms.

This wasn’t always the case. Before Planet Labs’ founding in 2010 by three former NASA scientists, satellite imagery users typically worked with outdated photographs, sometimes months or years old. The company’s breakthrough was building the infrastructure to capture current, global-scale data continuously.

This technological advantage translates into enormous potential. Planet Labs estimates its total addressable market at $128 billion, reflecting the value of real-time planetary observation for agriculture, urban planning, insurance, defense, and countless other sectors.

Financial Reality Check

Despite its market opportunity, Planet Labs remains in early-stage profit generation. Consider the numbers from the first nine months of 2025:

• Revenue reached $221 million, up 21% year-over-year
• Operating expenses exceeded revenue, though down 7% compared to the prior year
• Net loss hit $94 million (versus $88 million in the same 2024 period)
• Free cash flow came in at $59 million

The company has captured less than 1% of its estimated TAM. This massive gap suggests extraordinary runway for expansion, yet the balance sheet shows Planet Labs isn’t yet profitable and has no established earnings to value against stock price.

The Valuation Question

This is where caution enters the conversation. Planet Labs’ price-to-sales ratio now sits at 23x—a dramatic premium to its historical average of 5x. The stock commands roughly four times its typical sales multiple, reflecting the market’s bullish pivot and high growth expectations baked into today’s price.

For comparison, when evaluating alternative investments (whether stocks like Netflix or Nvidia that delivered spectacular returns, or traditional safe havens like gold), investors typically demand margin of safety. Here, that margin appears thin.

Assessing the Timing

The central question isn’t whether Planet Labs has room to grow—the 99%+ untapped TAM argues strongly for yes. Rather, it’s whether current prices fairly reflect that opportunity or have gotten ahead of themselves.

Given that most of the stock’s all-time gains compressed into just four months, the pattern warrants measured skepticism. Without clarity on whether this is sustainable appreciation or a temporary spike, aggressive position-building seems premature.

A Practical Approach

For investors considering entry now:

Scale positions gradually. Deploy modest portions of intended capital rather than committing fully. This approach accomplishes two objectives: you participate if the rally continues, while maintaining dry powder if the stock retreats to buy additional shares at better prices.

Monitor execution. Track whether Planet Labs converts its market opportunity into accelerating revenue growth and improving unit economics. A company can own the right market and still stumble in execution.

Think long-term. Planet Labs’ destiny depends on capturing a meaningful fraction of that $128 billion TAM over years, not quarters. Patient investors who buy and hold through volatility may find ample reward, even if entry points aren’t perfect.

The real risk isn’t missing this particular moment—it’s overpaying relative to intrinsic value and long-term growth potential.