Laws and Order: Part 1
Science fiction writers use the idea of "antigravity" to break laws like those of physics. How can you live in a floating city? Antigravity. How do you zip across the landscape without wheels? Antigravity. It makes world building a bit easier and a bit more fiction than science. Antigravity isn't a thing that could exist in the real world — at least not one that science can imagine today.
The word itself isn't even accurate. Real antigravity wouldn't mean "floating." Antigravity would mean a force that constantly accelerates an object away from the source of the force — the opposite of gravity accelerating us all towards the center of the earth.
Anyway, here's Planet Labs, a satellite data company whose shares discovered antigravity. Breaking the laws of physics and finance, from the beginning of 2025 to the end of March 2026, they're up 600%.
A few suspects could be behind the mania:
Shares are up because of the market.
Shares are up because of what Planet’s achieved in the past 15 months.
Shares are up because of what’s ahead for the company.
The red herring
Suspect 1 seems least likely. The market's up 10% over the same time. Geopolitical conflict has ticked up too. About 70% of Planet’s business comes from defense and intelligence. But most of Planet’s rise came before Israel and the US went to war against Iran and well after Russia invaded Ukraine.
A slightly hotter take could be that the recent rumors of SpaceX's IPO have lifted shares of anything that touches the "Space" space. So, is Planet's rise related to SpaceX fever? Less than a fifth of Planet's rise has come during the window that media have been reporting on the SpaceX IPO.
The usual suspect
Planet shares had four days they jumped up by a third or more.
Anything interesting happen on those days?
They all came on the heels of Planet’s quarterly financial releases. More than 80% of Planet's share price increase happened on those days. Investors are lapping up whatever management is serving. This points to either suspect 2 or 3.
Are investors celebrating the progress Planet's made or giving credit for a widening aperture of opportunities for the outfit?
Here’s the case in favor of investors leaning on financial performance: Planet's revenue increased 41% last year. Pretty solid. It made its first full year of positive earnings. Also promising. Buuuuut, the company trades at 31x revenue… So, uh, future expectations look to be doing a lot of work holding shares up here. Planet achieved a lot over the past 15 months, but Suspect 2 looks like a bit player.
The smooth operator
We're left with Suspect 3. Investors are actually forward looking, and they see a lot of future success for Planet. This makes sense. Investors are supposed to be forward-looking.
What do investors see?
Sometimes investors are superficial. Maybe they see what can be measured. Planet's backlog grew 79% last year. That nicely outpaced revenue growth. The portion of that backlog it expects to earn over the next year grew 74%. Last year that slice only grew 18%. It’s accelerating its future book of business and sharpening its view of its future business with longer contracts. Investors like future growth. They like increasing certainty.
I think we're getting closer. Planet trades at 10x its backlog. That’s unlikely to be the only thing wooing investors to shares. If Planet — the investment — works from here, booming backlog isn't enough. It won't be something investors see in the financials. An investor looking at Planet today will need to clean their telescope, screw their eyes up and look at the company a bit more creatively to see how it could possibly — maybe — justify such a lofty price.
Part 2 incoming.
Disclaimer: None of this is investment advice. It's meant to illustrate ways LCM thinks about investing. Things that LCM decides are good investments for LCM and its clients are based on many criteria, not all of which are covered here. Some or all of LCM's ideas may not be suitable for other investors. LCM does not recommend investing either long or short any position mentioned. LCM may own positions in some of the companies mentioned. Some of its ideas will lose money — investing entails risk. See full disclaimer here.