Why Planet Labs Stock Just Rocketed

Earth observation satellite company Planet Labs (NYSE: PL) stock rocketed 32.5% through 11:10 a.m. ET Thursday morning, after beating analyst forecasts for both sales and earnings last night.

Heading into the fiscal Q3 2026 report, analysts weren't optimistic, expecting Planet to lose $0.04 per share on $72 million in sales. Instead, Planet broke even -- zero cents lost, zero cents earned -- and scored $81 million in revenue.

Image source: Getty Images.

Planet Labs Q3 earnings

Planet Labs grew its sales 33% year over year -- and tripled its backlog, suggesting even more revenue growth lies ahead. "We're seeing strong traction with our AI-enabled global monitoring solutions," said CEO Will Marshall, and the company's pivot away from environmental science activities and toward military and security contracts is bearing fruit, as "demonstrated by our recent award under the NGA's Luno B program and expansion with NATO."

Best of all, as CFO Ashley Johnson pointed out, Planet Labs just reported its "third consecutive quarter of positive free cash flow."

Is Planet Labs stock a buy?

I don't know about you, but this is the number I'm focused on at Planet Labs. GAAP-unprofitability notwithstanding, year to date, Planet has now generated $58.6 million in positive free cash flow, or $55.2 billion if you count "capitalized internal-use software" as a capital expense (which I do). Annualize that number, and the company's on course to report its first-ever year of positive free cash flow, perhaps as much as $73.6 million.

Is that enough to make Planet Labs stock a buy?

Valued at $5.25 billion today, it gives the stock a price-to-free cash flow ratio of about 71. Expensive? Yes. But assuming FCF continues growing even faster than the 33% pace of sales growth, then yes, I believe Planet stock may be a buy.

Rich Smith 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.