What happened
Shares of Planet Labs (PL 2.87%) have been making big gains in Thursday's daily trading session upon the disclosure of a substantial new insider stock purchase. The satellite imaging company's share price was up roughly 12.5% as of 2:30 p.m. ET, according to data from S&P Global Market Intelligence.
Planet Labs filed a disclosure with the Securities and Exchange Commission (SEC) on April 5, revealing that its president of product and business Kevin Weil had purchased nearly $1 million in company stock. The filing showed that the executive bought 274,000 shares at $3.64 per share, and news of the substantial purchase appears to be spurring bullish momentum for the satellite technology company in today's trading.
Image source: Getty Images.
So what
As famously successful investor Peter Lynch once said, "Insiders might sell their shares for any number of reasons, but they buy them for only one: They think the price will rise." On the heels of Planet Labs' disclosure that its president of product and business had made a substantial stock purchase, investors are following the move, and the buying action has powered a significant jump for the satellite imaging company's share price.
Now what
Kevin Weil's purchase of nearly $1 million in shares represents a significant vote of confidence from Planet Labs' president of product and business. But the stock remains a high-risk, high-reward play.
PL PS Ratio (Forward) data by YCharts
Planet Labs trades at roughly 4.4 times this year's expected sales, and it's not clear when the business will shift into profitability on a generally accepted accounting principles (GAAP) basis. Based on management's guidance, the company is on track to post sales between $248 million and $268 million -- good for annual growth of roughly 35% at the midpoint of the target. The satellite imaging specialist is growing sales at an encouraging rate, but it remains to be seen if it can shift into profitability and deliver consistent earnings growth.
