Is Now a Strategic Entry Point for Planet Labs (PL) Following a Volatile Earnings-Driven Selloff?

The recent selloff in Planet Labs (NYSE: PL) has sparked a critical question for contrarian growth investors: Is this a buying opportunity in a fundamentally improving, high-momentum stock, or a warning sign of overvaluation and unsustainable growth? To answer this, we must dissect the company's accelerating revenue, technical strength, and valuation concerns through the lens of disciplined, long-term investing.

Fundamental Strength: Revenue Growth and Free Cash Flow

Planet Labs delivered a standout Q3 2025 performance, with revenue surging 32.6% year-over-year to $81.25 million, far exceeding analyst estimates of $72.13 million. This growth was driven by a 70% year-over-year increase in defense and intelligence sector revenue, fueled by contracts with the National Geospatial-Intelligence Agency (NGA), the U.S. Navy, and NATO. The company also reported positive free cash flow of $911,000 for the quarter, a dramatic turnaround from a $3.56 million loss in the prior-year period.

Equally compelling is the backlog growth of 216% year-over-year to $734.5 million, which provides a clear runway for future revenue. Management raised full-year 2026 revenue guidance to $297–$301 million, reflecting confidence in sustained demand for its satellite data and AI-driven analytics. These fundamentals suggest Planet Labs is transitioning from a high-growth startup to a scalable, cash-flow-positive business.

Technical Analysis: A Minervini Uptrend with Overbought Risks

From a technical perspective, Planet Labs' stock aligns with the Minervini Trend Template, with price action above key moving averages (5, 20, 50, and 200-day) and proximity to its 52-week high. However, the recent selloff has created a divergence between fundamentals and technicals. The Relative Strength Index (RSI) is above 70, signaling overbought conditions, while the Chaikin Money Flow indicator turned negative, hinting at selling pressure.

This combination of strong fundamentals and overbought technicals is a classic setup for a potential correction. For contrarian investors, such dislocations often present opportunities to enter high-quality stocks at discounted prices. The key question is whether the selloff reflects a temporary overreaction or a structural issue in the company's valuation.

Valuation Concerns: High Multiples and DCF Discrepancies

Despite the bullish fundamentals, Planet Labs' valuation metrics raise red flags. The stock trades at a price-to-sales ratio of 22.88x, significantly above the industry average. A discounted cash flow analysis by Simply Wall St estimates an intrinsic value of $2.16 per share, implying the stock is overvalued by 853.2%. Zacks Research's recent downgrade to "Strong Sell" further underscores concerns about sustainability according to MarketBeat.

However, these valuation concerns must be weighed against the company's unique position in the geospatial data sector. Planet Labs operates a constellation of over 200 satellites and has secured strategic partnerships with tech giants like Google according to ChartMill. Its focus on AI-driven analytics and national security applications-sectors with long-term growth potential-could justify premium multiples if the company continues to execute.

Contrarian Case for Entry: Balancing Risks and Rewards

For investors adhering to contrarian growth principles, the recent selloff in Planet Labs offers a nuanced opportunity. The stock's strong fundamentals-accelerating revenue, positive free cash flow, and a robust backlog-suggest the company is on a solid trajectory. Meanwhile, the technical overbought conditions and valuation concerns indicate the market may be overcorrecting, creating a potential entry point for disciplined buyers.

The key risks include the sustainability of high multiples and the possibility of a deeper correction if earnings momentum slows. However, Planet Labs' strategic positioning in defense and intelligence markets, coupled with its ability to generate recurring revenue from long-term contracts, provides a buffer against short-term volatility.

Conclusion: A Calculated Bet on Long-Term Growth

Is now a strategic entry point for Planet Labs? The answer hinges on a careful assessment of the company's trajectory. While the recent selloff reflects valid concerns about valuation, the underlying business is undeniably stronger. For investors with a long-term horizon and a tolerance for volatility, the current price correction may represent an opportunity to buy into a company poised to capitalize on the geospatial data revolution.

As always, patience and discipline are paramount. The stock's technical setup suggests a potential pause or correction before resuming its uptrend according to ChartMill, making this a prime candidate for a low-risk entry if the selloff proves overextended.