Is Now Too Late to Invest in Planet Labs Amid a 500% Surge?

The question of whether to invest in Planet Labs (NYSE: PL) has become increasingly urgent as its stock has surged nearly 500% in recent months. This explosive growth, driven by robust financial performance and strategic advancements in satellite analytics, has positioned the company as a bellwether of the space economy. Yet, with valuation metrics straining against industry norms and investor expectations reaching fever pitch, the critical question remains: Is this a sustainable opportunity, or has the market already priced in all the good news?

Financial Performance: A Foundation of Growth

Planet Labs' Q3 2025 results underscore its trajectory as a high-growth enterprise. Revenue hit $81.3 million, a 33% year-over-year increase and a 12.2% beat over analyst forecasts. This marks the company's fourth consecutive quarter of adjusted EBITDA profitability, with $5.6 million in adjusted EBITDA profit. The defense and intelligence sector, a key growth driver, contributed 70% year-over-year expansion, fueled by contracts with the U.S. National Geospatial-Intelligence Agency (NGA) and the National Reconnaissance Office.

The company's balance sheet also appears resilient. A $460 million convertible debt raise in 2025 bolstered cash reserves to $677 million by Q3 2025, while free cash flow turned positive for the third consecutive quarter. Perhaps most striking is the backlog of $734.5 million, up 216% year-over-year, which provides a clear line of sight to future revenue. CEO Will Marshall has set an ambitious target of EBITDA profitability by fiscal 2026, with full-year revenue guidance raised to $297–$301 million.

Valuation Metrics: A Tale of Two Narratives

Despite these fundamentals, Planet Labs' valuation has become a contentious issue. The stock trades at a price-to-sales (P/S) ratio of 15.19x, far exceeding the industry average of 1.37x and its proprietary "fair ratio" of 4.18x according to Sahm Capital. A discounted cash flow (DCF) analysis suggests the stock is overvalued by approximately 5,632% relative to intrinsic value, a figure that dwards even the most aggressive growth multiples in tech.

This disconnect between performance and valuation is not lost on analysts. While Planet's backlog and EBITDA margins signal operational strength, skeptics argue the market has already priced in a significant portion of its anticipated growth. As one report notes, "The valuation incorporates much of the upside, leaving little room for error." Comparisons to peers like Rocket Lab further highlight the premium: Rocket Lab trades at a forward P/S of 28.67x versus Planet's 9.00x, despite facing higher operating costs.

Growth Drivers and Strategic Risks

Planet's ascent is underpinned by its dominance in Earth observation and AI-driven analytics. The acquisition of Sinergise in 2023 enhanced its ability to process satellite data, while a new manufacturing facility in Berlin aims to accelerate satellite production. These moves position the company to capitalize on surging demand from defense, agriculture, and climate monitoring sectors.

However, risks loom large. The space sector is notoriously capital-intensive, and Planet's reliance on government contracts-accounting for a significant portion of its revenue-introduces political and budgetary uncertainties. Moreover, the company's high P/S ratio assumes continued outperformance in gross margins and customer retention, which could falter if competition intensifies or demand softens.

Conclusion: A High-Stakes Bet

For investors, Planet Labs represents a classic dilemma: a company with demonstrable growth and a compelling long-term vision, yet trading at a valuation that demands near-perfect execution. The 500% surge reflects confidence in its ability to monetize the space economy, but the DCF analysis and peer comparisons suggest caution.

Is now too late to invest? For risk-tolerant investors who believe in Planet's ability to sustain its EBITDA growth and expand margins, the stock may still offer upside. Yet for those wary of overvaluation, the current price may signal a peak. As with any high-growth stock, the answer hinges on whether the company can deliver on its ambitious roadmap-and whether the market is willing to wait.