Key Points
SpaceX was about to IPO, and investors bought Planet Labs while they waited for it.
Then SpaceX IPO'ed -- then investors started selling Planet Labs stock.
It's not hard to follow the money here.
Don't say you were not warned.
Previewing the SpaceX(NASDAQ: SPCX) IPO earlier this year, I explained what investors should expect -- in three simple steps.
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- First: SpaceX IPO fever would make space stocks skyrocket -- and Planet Labs (NYSE: PL) rose 38% in four months.
- Next: Investors would question whether they wanted to own a second-tier space stock like Planet, when industry leader SpaceX would soon go public.
- Finally: Investors would rush to sell other space stocks, and put the money in SpaceX instead.
We're in this final stage now, and Planet Labs stock is down 20% since SpaceX's IPO.
Image source: Getty Images.
Planet falls to Earth
Planet Labs stock dropped another 11% through 10 a.m. ET today -- while SpaceX stock gained nearly 14%. This brings to mind the old advice "follow the money," except here, the money trail is so obvious you don't really need to do much following.
Investors are pulling money out of Planet and pouring it into SpaceX stock instead.
What's next for Planet Labs stock
For Planet Labs investors, this has to feel discouraging -- but don't lose hope, because the money flows on this one could soon reverse. According to data from StreetInsider.com, call options to buy Planet Labs stock at much higher prices than today are currently outrunning put options to sell Planet stock by a 3-to-1 ratio.
This tells me that serious investors are preparing for a serious rally in Planet stock -- and they may be right. After all, according to data from S&P Global Market Intelligence, Planet Labs is one of the only space stocks generating positive free cash flow today -- versus SpaceX, which burned $14.1 billion in cash last year.
It's really no contest. Planet stock is the better value play here.
Should you buy stock in Planet Labs PBC right now?
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Rich Smith has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Planet Labs PBC. The Motley Fool has a disclosure policy.
