Why Planet Labs Stock Climbed 15.8% In March

Shares of Planet Labs (NYSE: PL) were up 15.8% successful March, according to information from S&P Global Market Intelligence. The institution operates a fleet of satellites that regularly seizure images of Earth and sells the work for some commercialized and authorities purposes. Investors person gotten ultra-bullish connected the institution implicit the past year, with the banal up astir 1,000% successful the past 12 months alone.

Here's wherefore Planet Labs banal was rising erstwhile again this week, and whether you should see adding it to your portfolio.

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Planet Labs released its Q4 net successful March, putting up stellar maturation erstwhile again. Revenue grew 41% twelvemonth implicit twelvemonth to $87 million, portion generating full-year escaped currency travel of $53 million, demonstrating the sustainability of its innovative orbital imaging work model.

More importantly, Planet Labs grew its backlog 79% twelvemonth implicit twelvemonth to $900 cardinal successful the quarter. This volition assistance it turn gross for years to travel from semipermanent contracts specified arsenic the $100 million+ woody it signed with the Swedish government.

The institution keeps pushing the borderline by adding adjacent much satellites to its work and improving representation prime for customers. What's more, it has caller partnerships with Alphabet to physique information centers successful space, arsenic good arsenic Nvidia to assistance with representation processing and analysis. It is unclear however overmuch volition travel from these projects, but the marketplace is presently treating it arsenic rather bullish.

Planet Labs is simply a fascinating business. Its gross keeps compounding, and should turn into the hundreds of millions successful the years up owed to its monolithic backlog. Long-term partnerships with exertion giants should springiness it optionality arsenic well. Plus, it has coagulated portion economics, with gross margins supra 50%, and it generates affirmative escaped currency flow.

The occupation stems from the stock's valuation. After rising much than 10x successful the past year, Planet Labs presently trades astatine a marketplace headdress of $12.5 billion, which volition beryllium further exacerbated by a stock number that keeps rising and diluting existing shareholders.

This is rather a premium to the company's trailing revenue, giving it a price-to-sales ratio (P/S) of 42. Even if Planet Labs tin turn its gross astatine a double-digit complaint for the adjacent decade, the banal looks wildly overvalued for investors looking to bargain close now. Avoid chasing Planet Labs banal aft it deed different all-time precocious successful March.