Shares of Planet Labs sank nearly 19.7% in morning trading following the company's release of fiscal first-quarter 2027 results after Thursday's close and a simultaneous filing for an at-the-market (ATM) stock offering that could raise up to $1.5 billion. The size and mechanics of the equity program appeared to overwhelm what was otherwise a strong financial report.
Planet Labs established the $1.5 billion ATM program on June 5, 2026, arranging with major banks to sell Class A shares over time. The company also put in place range forward sale structures that rely on borrowed shares and hedging windows to manage pricing and settlement. Those more complex equity-financing tools introduce an additional dilution and trading dynamic that investors weighed heavily.
On the surface the earnings print looked solid. Wall Street received upside to consensus: Needham raised its price target to $53 from $40 while keeping a Buy rating, citing strong fiscal first-quarter 2027 results that exceeded consensus revenue and earnings per share estimates by 4.6% and $0.02 respectively. The company also reported record revenue and raised its full-year outlook.
Still, margins became the focal point for market participants. Planet's non-GAAP gross margin slid to 56% from 59% a year earlier. On the earnings call, CFO Ashley Johnson warned: "We expect non-GAAP gross margin for the quarter to be between 52% and 55%, a modest step-down from Q1 as a result of our satellite services execution, the mix of deals with AI-enabled partner solutions, and increased depreciation from the recent launches of our Pelicans." That guidance trimmed near-term profitability expectations and amplified investor concern.
Market context compounded the reaction. The S&P 500 declined 1.0% and the NASDAQ fell 1.75% during the session, creating a risk-off backdrop that typically pressures high-multiple growth stocks. The space sector, which had enjoyed an especially heated run in May, showed signs of cooling heading into Friday. Planet Labs' shares had already slipped in after-hours trading and extended losses overnight on Thursday despite the company's record revenue and raised outlook, leaving the stock on pace for its worst week in more than a year.
Friday's sharp move reflects the confluence of three distinct factors: the announcement of a sizable dilutive equity program, a softer gross-margin outlook for the near term, and profit-taking after a rapid rally. The company projects second-quarter revenue between $102 million and $107 million, with adjusted EBITDA around $2.5 million - a constructive forward snapshot that may take time to regain investor focus as the dilution overhang is parsed.
While Planet Labs' revenue trajectory is expected to continue upward for years, the stock had already risen roughly 10x over the past year, leaving elevated expectations baked into the price. That degree of prior appreciation made the shares particularly vulnerable to a correction once dilution and margin uncertainty emerged as tangible near-term risks.
What to watch next
- How quickly the ATM program is executed and the cadence of any share sales.
- Whether management provides additional color on the composition of AI-enabled partner deals and the timing of depreciation from recent satellite launches.
- Market appetite for high-multiple space and data companies amid broader risk-off conditions.