Planet Labs' Swedish Deal Reinforces Growth but Fails to Address Core Investment Risks

What happened

Planet Labs signed a multi-year, low nine-figure contract with the Swedish Armed Forces for satellites and data solutions, its third satellite services deal in twelve months, highlighting continued demand in defense markets. However, the DeepValue master report rates the stock as a POTENTIAL SELL with high conviction, citing a stretched valuation of PB ~15.8 and negative EV/EBITDA, alongside heavy customer concentration and $446 million in convertible notes. This agreement adds to the $734 million backlog but does not mitigate execution risks, such as potential delays in Pelican satellite deliveries or reliance on a few sovereign customers for revenue. Despite the stock's ~470% surge over the past year, which prices in flawless execution, the news is incremental and does not alter the fundamental overvaluation or concentration dangers. Investors must remain critical, as the current price offers limited upside versus significant downside if growth slows or any top customer reduces spending.

Implication

This deal bolsters Planet Labs' revenue visibility and aligns with its defense-focused strategy, potentially sustaining 20%+ growth rates. However, it increases reliance on government contracts, amplifying exposure to budget cycles and geopolitical shifts that could disrupt future renewals. With valuation multiples already elevated, the stock remains vulnerable to execution missteps, such as delays in the APAC Pelican program or cost overruns at the Berlin facility. The DeepValue report's bear scenario, where revenue growth slows to low teens, remains credible if key customers defer or cancel contracts. Therefore, while positive, this news does not warrant a change in the cautious investment stance, and investors should prioritize risk management over momentum chasing.

Thesis delta

The Swedish deal reinforces the base case of backlog expansion and sustained growth, but it does not shift the core investment thesis. Key risks—including overvaluation, customer concentration, and execution challenges on satellite deliveries—remain unaddressed and unchanged. Thus, the POTENTIAL SELL rating and recommendations to trim above $26 or buy below $17 stay valid, as the news is insufficient to alter the asymmetric risk-reward profile.