Planet Labs Stock Rose 48% After Earnings. Why It’s Falling Today.

Planet Labs, the Earth imaging company, announced a proposed private offering of $300 million of convertible senior notes. (Courtesy Planet Labs/NASA)

Planet Labs stock declined Tuesday after the Earth imaging company said it planned to privately offer $300 million worth of convertible senior notes.

In a press release late Monday, Planet Labs said the notes will be general, unsecured obligations of the company that bear interest payable semi-annually in arrears. They will convert into cash, shares of common stock, or a combination of both at the company’s choosing. The notes will mature in October 2030, Planet Labs added.

In connection with the pricing of the notes, Planet Labs plans to enter into privately negotiated capped call transactions with one or more purchasers. Some of the net proceeds from the sale will go towards these transactions, while the remainder will be used for “general corporate purposes.”

Planet Labs tumbled 3.3% to $9.35. The stock reaction appeared to reflect concerns about potential dilution. The benchmark S&P 500 index was flat.

Shares closed up 48% on Monday after the satellite operator posted a narrower-than-expected second-quarter loss and boosted its guidance. After recording its second quarter of positive free cash flow, Planet Labs said it was on course to be free cash flow positive for the fiscal year, a year ahead of targets.

Write to Mackenzie Tatananni at mackenzie.tatananni@barrons.com