Is Planet Labs Stock a Buy or Sell After a Monster Rally?

• StockStory Top Pick PL +5.57%

Shares of Planet Labs (PL) jumped over 12% on Monday after the company announced a major new contract with the Swedish Armed Forces. The ongoing rally in Planet Labs stock reflects growing investor confidence in the company’s expanding role in global security and geospatial intelligence.

The recent agreement, described as a multi-year, low-nine-figure deal, will see Planet rapidly deliver a suite of satellites, along with space-based data and situational awareness solutions.

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Planet Labs’ Growing Global Footprint in National Security

This latest win is particularly notable because it represents Planet’s third satellite services contract in the past twelve months, pointing to strong demand for its space-based hardware and software solutions.

Over the last year alone, Planet has secured more than $500 million in satellite services agreements, including contracts supporting Japan's national security requirements through JSAT and additional work in collaboration with Germany. Collectively, these deals highlight Planet’s growing importance as a trusted partner to governments seeking modern, resilient space capabilities.

A Monster Rally Backed by Expanding Use Cases

Investor enthusiasm for Planet Labs stock has been very strong, reflected in the monster rally in its share price. Shares of this space technology company, which provides daily satellite imagery and advanced geospatial data, have surged more than 620% over the past year as markets recognize the breadth of its applications. Planet’s data is increasingly used across sectors such as agriculture, defense and intelligence, energy and utilities, and forestry, serving both commercial customers and government agencies worldwide.

The momentum in Planet Labs’ business will likely sustain, supporting its share price. Planet offers governments and enterprises a cost-effective, low-risk, and rapid path to advanced space-based capabilities without the need for large upfront capital investments. As defense budgets are increasing globally and demand for real-time Earth observation grows, Planet Labs is well-positioned to sustain its growth and deepen its footprint across both security and commercial markets.

Planet Labs to Sustain Momentum

The company’s underlying fundamentals remain solid, supported by the strength and quality of its recurring revenue base. In Q3 of the current fiscal year, its recurring annual contract value (ACV) accounted for 97% of the end-of-period ACV book of business, reflecting management’s consistent emphasis on subscription-based data contracts and solutions rather than one-time professional or engineering services.

Importantly, approximately 83% of total ACV is derived from annual or multiyear contracts. While this figure is modestly lower than in prior periods, the shift reflects a higher mix of large, shorter-duration government contracts closed in recent quarters rather than any deterioration in demand or customer commitment.

Plant Labs’ retention metrics remain robust, with a net dollar retention rate of 109% at the end of the third quarter. This reflects continued customer expansion and platform stickiness.

Planet Labs’ profitability metrics show the impact of strategic investments. Margins were pressured during the quarter as the company invested to support satellite services contracts and adapted to a revenue mix that increasingly includes AI-enabled partner solutions. Even so, revenue growth and operating leverage continued to translate into improved earnings performance. Adjusted EBITDA reached $5.6 million in the third quarter, driven by higher revenue and disciplined expense management. Notably, this marked the fourth consecutive quarter of adjusted EBITDA profitability.

Planet Labs ended the quarter with a backlog of $734.5 million, up 216% year-over-year (YoY), providing a substantial pipeline of contracted business. It also generated positive free cash flow for the third straight quarter, further strengthening the sustainability of its operating model.

The company’s recurring revenue base, strong customer retention, improving profitability, and growing backlog suggest it is well-positioned to sustain momentum in 2026.

Is PL Stock a Buy or Sell?

The massive rally in PL stock keeps analysts cautiously optimistic about its prospects. While Planet Labs stock has a “Moderate Buy” consensus rating, growing government contracts, a rapidly expanding backlog, improving profitability, and a highly recurring revenue base make it a compelling investment.

The momentum in Planet Labs’ business will likely sustain in 2026, supporting its share price.

On the date of publication, Amit Singh did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. This article was originally published on Barchart.com