What Happened?

Shares of earth imaging satellite company Planet Labs (NYSE: PL) jumped 36.6% in the afternoon session after it reported much better-than-expected financial results for its third quarter and provided a strong outlook. 

For the quarter, Planet Labs announced revenue of $81.25 million, a 32.6% year-on-year increase, and adjusted earnings per share of $0. This performance surpassed Wall Street's expectations for revenue of $72.13 million and a loss of $0.04 per share. The company also turned free cash flow positive, reporting $911,000 compared to a loss of $3.56 million in the same quarter last year. Looking ahead, the company provided a bullish outlook, guiding for fourth-quarter revenue of $78 million at the midpoint, ahead of the $73.39 million consensus. 

Furthermore, it raised its full-year adjusted EBITDA guidance to $7 million, a significant improvement from analysts' prior estimate of a $3.21 million loss.

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What Is The Market Telling Us

Planet Labs’s shares are extremely volatile and have had 59 moves greater than 5% over the last year. But moves this big are rare even for Planet Labs and indicate this news significantly impacted the market’s perception of the business.

The previous big move we wrote about was 17 days ago when the stock gained 2.6% on the news that renewed enthusiasm for Alphabet reinvigorated the artificial intelligence trade, propelling a market rebound heading into the Thanksgiving holiday. 

The Nasdaq index jumped 2.6% and the S&P 500 gained 1.6%, driven by a 5% rally in Alphabet following the announcement of its upgraded Gemini 3 AI model. This optimism spilled over into the broader tech sector, lifting shares of Broadcom, Micron, and Palantir significantly. The rally built on momentum from the previous trading session, sparked by the New York Fed president keeping the door open for a December interest rate cut.

Planet Labs is up 352% since the beginning of the year, and at $17.96 per share, has set a new 52-week high. Investors who bought $1,000 worth of Planet Labs’s shares at the IPO in April 2021 would now be looking at an investment worth $1,814.

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