Highlighting that the company has “no profit but no real competition,” a caller inquired about Planet Labs PBC (NYSE:PL) during the lightning round on October 2, and Mad Money host Jim Cramer replied:
Look, I think it’s a terrific company. The stock went all the way up on a speculative bubble and then came all the way back down. Had a good day today. I think you should buy it. I think it’s done going down. Wow, I’m just right out there.
In June, Planet Labs also caught Cramer’s attention in a broader discussion of other space stocks, where his enthusiasm came with a catch.
Government Contracts Expand the Business
Planet Labs PBC is finding additional customers for dedicated satellite services. On September 15, it announced a German federal contract with a maximum possible value of €25 million over five years, including options. The agreement covers dedicated satellite tasking and a European-hosted data platform. Planet said the award did not change its existing fiscal-year guidance.
The company’s fiscal 2027 second quarter, ended July 31, also showed substantial growth. Revenue increased 58% to $116.1 million, while adjusted EBITDA more than doubled to $13.9 million. It finished the quarter with $865.4 million in cash, cash equivalents, and short-term investments, providing resources to fund further expansion. Planet Labs’ 58% revenue growth raises a bigger question about whether its backlog can support lasting profitability.
Competition and Profitability Still Matter
The caller’s description of the competitive landscape needs qualification. Planet Labs PBC’s latest 10-Q filing identifies competitors including BlackSky, Airbus Defense and Space, Satellogic and other commercial and government providers. It also warns that competitive pricing could reduce average selling prices. The company has differentiated capabilities, but it does not operate without meaningful competition. Profitability also depends on the measure used. Despite positive adjusted EBITDA, Planet reported a $9.4 million quarterly GAAP net loss. Its gross margin declined to 57% from 58% a year earlier, showing that rapid revenue growth has not eliminated pressure on the cost of delivering its services.
With no meaningful positive P/E, sales multiples offer a more useful valuation comparison. Planet trades at approximately 16.7x trailing sales, versus 8.0x for BlackSky. On enterprise value to trailing revenue, the figures were approximately 15.7x and 7.9x, respectively. Planet’s premium leaves substantial expectations attached to its future growth and profitability. Planet Labs and SpaceX offer different routes into the space industry, raising questions about what can sustain their growth.
Fund Buying Coexists With Considerable Short Exposure
According to Insider Monkey, 53 hedge funds held Planet Labs PBC in Q2, compared with 43 in the prior quarter. D E Shaw increased its holdings by nearly 23% to 9.75 million shares and was the largest shareholder among the hedge funds tracked by Insider Monkey. Short interest was 9.68% of the public float. The increase in fund participation suggests growing institutional interest, while the short position shows that a meaningful group of investors remain skeptical.
Planet’s new contracts and improving results give Cramer tangible reasons for his enthusiasm. His claim that the stock has finished falling is a much stronger prediction. The business is making progress, but its valuation still requires investors to pay well ahead of consistent GAAP profitability.
While we acknowledge the risk and potential of PL as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than PL that has 10,000% upside potential, check out our report about this cheapest AI stock.
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