Planet Labs (PL) shares experienced a notable surge on Friday, March 6, climbing 7.2% without any formal announcements or upgrades to clarify the unexpected boost. The sudden interest in the stock seems to be closely linked to the escalating conflict with Iran and the company’s pivotal role in providing satellite imagery during this crisis.
In a recent analysis, Michael Leshock, an analyst at KeyBanc, suggested that investors should consider increasing their exposure to defense-related stocks. He indicated that with the Iranian conflict potentially developing into a more prolonged engagement, extending anywhere from four to eight weeks, the demand for military intelligence tools—including satellite imagery—is likely to rise.
Planet Labs operates a constellation of approximately 200 Earth observation satellites, making it one of the foremost providers of timely and detailed satellite imagery globally. Throughout the past week, various news organizations have utilized the company’s images to document the aftermath of drone strikes on Iranian infrastructure, including command-and-control centers and ballistic missile launch sites.
“The conflict could result in heightened demands for real-time imagery, which could significantly benefit companies like Planet Labs,” a market watcher noted.
On the same day the stock saw its increase, Planet Labs announced a significant operational change: a 96-hour delay on releasing new satellite imagery over Gulf States impacted by Iranian drone attacks. The company characterized this decision as a “temporary” measure reflecting its commitment to responsible data practices and the protection of personnel on the ground. While Planet Labs did not disclose if this precaution was taken at the behest of U.S. authorities, it was clear that the decision aimed to ensure the safety of allied and NATO-partner personnel and civilians in those regions.
Historically, the company had previously imposed a similar 30-day delay on imagery related to Gaza, illustrating its cautious approach amidst geopolitical tensions.
Valuation and Market Outlook
Despite the impressive gains—up 23.9% year-to-date and over fivefold in the past year—several analysts are raising concerns regarding Planet Labs’ valuation. The stock recently closed at $25.28; however, a DCF model indicates the intrinsic value could be as low as $1.99 per share, suggesting a stark overvaluation by more than 1,000% based on projected free cash flows through 2035.
With a price-to-sales ratio of 30.53, Planet Labs trades significantly higher than the industry average of 1.11 and the peer average close to 1.00. While bullish analysts project a fair value near $33.00 per share based on anticipated growth from defense contracts, sovereign deals, and advancements in AI analytics, bearish viewpoints consider the current stock price as overly optimistic, recommending a fair value closer to $11.31.
On the evening of March 7, Planet Labs’ stock settled at $25.28, nearing a 4.7% increase over the past week and recording a 13.6% gain in the last 30 days. As investors continue to navigate the intertwining domains of satellite technology and international relations, the future trajectory of Planet Labs will undoubtedly be shaped by both market trends and geopolitical developments.
