Key insights
- Planet Labs stock experienced an 11.2% decline, not due to company-specific news, but as a reaction to an engine test explosion of Blue Origin's New Glenn rocket. This incident could lead to increased launch costs for Planet Labs due to reduced industry launch capacity. The significant year-to-date surge in Planet Labs' stock price may also be contributing to investor sensitivity to negative industry developments.
Planet Labs (PL 0.51%) stock tumbled 11.2% through 10:30 a.m. ET this morning -- that's the bad news. The good news is that there's no bad news on the wires today concerning Planet, per se, to explain why the stock is going down.
Instead, shares of the space stock are reacting to bad news from another space company entirely: Blue Origin.
Last night, you see, a Blue Origin New Glenn rocket, undergoing an engine test, exploded on its launch pad at Cape Canaveral in Florida. Initial reports suggest the LC-36A launch complex has been badly damaged, if not destroyed.
Now, this isn't necessarily, directly bad news for Planet Labs. So far as I'm aware, Planet Labs has never needed to hire the services of the Blue Origin megarocket to launch its tiny Earth-imaging satellites to orbit. Planet does use other launch providers, of course, and the loss of capacity from Blue Origin launches delayed by its investigation into the New Glenn explosion could raise launch prices across the industry.
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That's just how the law of supply and demand works -- taking New Glenn offline reduces the total launch services "supply." Given constant or growing demand, Planet's launch costs could rise.
My bigger worry, and I suspect what's really worrying investors today, though, concerns Planet stock specifically. Up an astounding 1,200% in share price this year, Planet Labs stock has been priced for a perfection that's very hard for any company to achieve.
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And now Blue Origin has just demonstrated that space is still "hard," accidents can happen, and they can take a real toll on space companies when they do. Carefully gauge your risk tolerance, investor. Things can always get worse.