According to tech industry legend, some of the world’s most influential companies got their start in Silicon Valley garages. Hewlett-Packard (HPE), Apple (AAPL), and Google (GOOG) are just a few examples of the innovation that can occur when the right people get together to bring creative ideas to life, no matter how humble the workspace.
On December 8, 2021, investors got the opportunity to trade a new company that promises to change the world: Planet.com. Like the wildly successful tech startups that came before it, Planet.com was launched in a California garage.
The company was founded in 2010 by three former NASA scientists who came together with a mission to build innovative solutions to everyday problems.
It appears they have succeeded – and thanks to a special purpose acquisition company (SPAC) merger, Planet.com stock is now listed on the New York Stock Exchange. Of course, with just a few weeks of trading history available, the big question is will Planet.com stock go up?
What Is Planet.com?
At its most basic, Planet.com’s original mission was to use information gathered from space to improve life on earth. That eventually translated into a huge network of satellites that capture fresh images of the planet every single day.
This never-before-available level of detail and the ability to see changes in targeted areas of the earth over time offers data that is critical to a variety of industries.
More than 34,000 users in 65 countries use Planet.com to identify trends and create solutions for everything from agriculture to disaster planning.
Planet.com & The Future Of Machine Learning
The sheer volume of data Planet.com collects is nearly impossible to comprehend. Hundreds of satellites cover all of the earth’s land twice a day – and in some cases, new images of key locations are produced up to ten times per day. Practically speaking, it’s far too much for humans to make efficient use of – but fortunately, the company isn’t expecting people to analyze the data at all.
Planet.com’s imagery is 100 percent Machine Learning (ML) ready, which means it can be used in a variety of Artificial Intelligence applications. That small fact is the biggest indicator that Planet.com stock will go up.
Consider this: as Artificial Intelligence becomes more sophisticated and Machine Learning techniques are perfected, AI analysis of historical images will produce previously unidentified patterns and trends. More importantly, based on those patterns and trends, AI will be able to predict the future with some degree of accuracy, giving people the knowledge they need to limit the impact of negative changes and encourage positive trends.
For example, through regular imaging, farmers will be better able to spot early signs of pest infestation or disease, so they can take action in time to save the season’s crop. Without that daily data, Planet.com contends that agriculture companies are at higher risk of losing revenue and their competitive advantage.
In another use case example, Planet.com noted that paper manufacturers will have greater insight into the health of their supply chain and their impact on the environment. Imaging would make it possible to track deforestation, which is reported to be responsible for up to 20 percent of greenhouse gas emissions.
With the right data, these companies would be better able to monitor crucial Environmental, Social, and Governance (ESG) metrics and work ESG goals into their strategic plans.
How Does Planet.com Fit In With Global Priorities?
There are two seismic economic shifts occurring simultaneously – the digital transformation and the transition to sustainability.
By some estimates, digital technology will create a cumulative value of $1 trillion or more by 2025, and there will be $53 trillion in global ESG assets by 2025. Planet.com is right in the center of both.
As the use of Big Data, Machine Learning, and Artificial Intelligence grows, Planet.com images will be in high demand.
Meanwhile, the evidence is clear that Planet.com can provide the information needed for effective decision-making around sustainability goals. With that in mind, there is every reason to believe that Planet.com stock will go up.
Planet.com By The Numbers
From an investment perspective, the beauty of Planet.com is that it doesn’t rely on a single industry or application for revenue. There is interest in Planet.com data across sectors.
Today, the company’s annual revenue is relatively evenly divided between Agriculture, Civil, Defense & Intelligence, and Mapping, along with a catch-all category of other users.
However, Planet.com’s top brass predict that within five years, the company will generate substantial revenue from the original four sectors, plus Energy & Infrastructure, Finance, Business Intelligence, Education & Research, and Commercial Forestry. In fact, Planet.com projects revenues as high as $693 million by 2026.
Planet.com’s subscription-based service offers a number of attractive advantages. For example, revenue is predictable – and more than 90 percent of the company’s current revenue is recurring. Furthermore, management has emphasized a strategy that works to attract and retain multi-year contracts, so a full 70 percent of the company’s current clients can be counted upon long-term.
The recurring revenue model has paid off, as evidenced by the fact that Planet.com has shown strong growth over the past five years. The company generated approximately $43 million for the 2016 calendar year. At the close of fiscal 2021, that figure was up to $113, making the compound annual growth rate (CAGR) an impressive 27 percent.
That growth rate may accelerate as the company leans into increasing revenue at a rapid rate. The current plan is two-fold – first, Planet.com will double its Customer Success team to ensure customer retention and maximize upselling opportunities.
Second, Planet.com will double its Software Engineering Team to improve existing products and create new ones. If both elements of this plan are successful, the rate of growth will increase, and Planet.com stock will go up.
The Planet.com Moat Is Data
It’s a bit of a shock to learn that Planet.com has hundreds of satellites in its network. That sounds like an exceptionally high number until it is compared to the total number of satellites orbiting the earth today. According to the United Nations’ Outer Space Objects Index, there are approximately 7,500 active satellites in 2021.
If a few hundred satellites are just a fraction of the total number of satellites currently in use, then it stands to reason that another company might be able to capture the same information that Planet.com relies on for revenue. Is that the case, or does Planet.com have a moat?
As a matter of fact, there is a moat. The former NASA scientists who founded Planet.com started off with the premise that existing satellites were far too large and bulky to produce the volume of information required. The solution was to build a smaller, more compact satellite that the founders called Cube-Sat. Those compact satellites are the first business moat that Planet.com constructed. Thanks to their small size, Planet.com’s satellite fleet can offer agile space missions – something no competitor can easily duplicate.
Second, Planet.com has been collecting images for years, and the data it already has is needed for effective Machine Learning.
Even if a competitor created its own satellite network tomorrow, it would remain at a disadvantage because there is no historical data available – a must to leverage the power of Artificial Intelligence.
Management claims to have a 5 year head start over any competitor and SPAC sponsor dMY’s Niccolo deMasi has claimed that no competitor ever caught up with Google after it seized the lead in search.
He sees Planet.com in similar terms to Google in 2001. At the time it wasn’t clear what Google could become but it was clear the search algorithm was valuable to every industry. He believes Planet.com data will have widespread applications to every industry and every Fortune 5000 stock.
Will Planet.com Stock Go Up? The Bottom Line
Planet.com stock remained steady in the first weeks of trading, but the release of its earnings report prompted the stock price to plummet.
Investors were evidently taken aback by the fact that the company is not yet profitable. However, this early in the game, that means almost nothing as far as the stock’s prospects.
Given the unique nature of Planet.com’s product line and its collection of valuable historical data, there is every reason to believe that Planet.com stock will go up.
The author has no position in any of the stocks mentioned. Financhill has a disclosure policy. This post may contain affiliate links or links from our sponsors.