Why Planet Labs Stock Crashed on Friday

Shares of Planet Labs (NYSE: PL) tumbled 15% through 11:35 a.m. ET Friday after the company reported last night that it had missed earnings forecasts.

Heading into the report, Wall Street analysts forecast the Earth observation space stock would lose $0.02 per share in the fiscal 2025 fourth quarter on $61.9 million in sales. Instead, the company reported a loss of $0.08 per share, and sales of only $61.6 million.

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Planet Labs' Q4 earnings

The news gets worse. Sales growth for the quarter was only 5% year over year. Also, the $0.08 loss was only an adjusted number. When calculated according to generally accepted accounting principles (GAAP), the company actually lost $0.12 per share, with $0.06 of the loss coming from what it called "impact from the change in fair value of warrant liabilities."

For the full-year fiscal 2025, sales grew 11% to $244.4 million, and losses amounted to $0.42 per share.

On the good news side, sales did grow some, and the gross profit margin on those sales continues to inch higher, reaching 57% for the full year, and topping 62% in the fourth quarter in particular.

The company tried to soften the blow from the poor earnings report this morning, announcing it has won a subcontract on a $95 million California Air Resources Board deal awarded to Carbon Mapper. Planet Labs did not say, however, how much of the $95 million will filter down from Carbon Mapper. Also, the contract is described as multiyear, so the annual revenue will certainly be less than $95 million.

Is Planet Labs stock a sell?

It was pretty much bad news all around. Management also said that its fiscal 2026 first-quarter revenue will be only $62 million, below Wall Street forecasts. And its full-year fiscal 2026 revenue will range from $260 million to $280 million -- which, at the midpoint, is slightly below Wall Street's expected $272 million.

The company did not give earnings guidance, but it seems safe to assume those earnings numbers will miss as well. Planet Labs is probably a sell at this point.

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Rich Smith has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.