Planet Labs stock on edge ahead of earnings: will it drop 20%

Planet Labs stock is stuck in a bear market after falling by 20% from its highest point this year.

PL was trading at $24.50, down from the year-to-date high of $30.85.

Its market capitalization has dropped from over $9 billion to the current $8.35 billion. So, will it rebound ahead of the upcoming earnings?

Planet Labs business is thriving 

Planet Labs PBC is a top company involved in earth observation solutions through low-orbit satellites. 

It designs, builds, and operates thousands of satellites and offers the services to government agencies and companies, including popular names like Bayer, AXA, and SwissRe.

Its images are used widely by media organizations like the New York Times, CNN, BBC, and Bloomberg.

Planet Labs stock has done well in the past few months, moving from last year's low of $2.85 in April last year to the current $24.60. This growth happened as the its revenue growth accelerated, with the annual figure rising from $133 million in 2021 to $244 million last year.

The challenge, however, is that the company continues to lose money, with its net loss in the last five years rising to nearly $700 million.

Its most recent results showed that its revenue jumped by 33% in the third quarter to $81.3 million, with the percentage of the recurring annual contract rising to 97%. It has over 80% of the annual or multi-year contracts. Most notably, its backlog jumped to $734 million from $232 million in the same period a year earlier.

Planet Labs stock will be in the spotlight this week as it publishes its financial results.

Yahoo Finance data shows that the average estimate is that its revenue rose to $78 million in the last quarter, near the guidance of between $76 million and $80 million.

If this happens, the annual revenue will come in at $297 million, up by 22% YoY, followed by $377 million this year.

The company will likely continue generating double-digit growth in the coming years.

Most importantly, analysts believe that the company will move towards profitability. Its earnings-per-share is expected to come in at a loss of 11 cents last year followed by 7 cents this year.

A key challenge is that the company continues to face substantial competition from other satellite companies like Maxar, BlackSky, Capella Space, and Airbus Defense.

Planet Labs stock price technical analysis 

PL stock chart | Source: TradingView 

The daily timeframe chart shows that the PL stock price peaked at $30.93 in January this year and then pulled back to the current $24.60.

A closer look shows that the stock has formed an ascending channel whose support and resistance levels are its lowest and highest levels since February 3rd this year.

The stock has remained above the 50-day Exponential Moving Average (EMA), while the Relative Strength Index (RSI) has moved downwards from the overbought level of 86 to the current 50.

Therefore, the most likely Planet Labs stock outlook is bearish, with the next key target being the key support level at $19.70, its lowest level in February, which is about 20% below the current level.

On the flip side, a move above the key resistance level at $27.50 will invalidate the bearish outlook.

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