Above It All: Planet Labs (PL)
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satellite imagery and data is driving a HOT market in commercial intelligencE
The world’s second oldest profession – spying, that is – is getting an unlikely makeover. A new generation of low-cost, space-based observation platforms is making once-costly overhead intelligence cheap and smart. The winners won’t come from boldly racing off to off-world destinations, but rather from precisely and intelligently peering back down to earth.
It’s a space race, alright. But more introspective and in miniature.
And sure enough, there is a clear, yet lightly-capitalized public company that offers reasonable exposure to new realities of harvesting and analyzing satellite images: San Francisco-based Planet Labs (PL).
Satellites of the State
Intelligence – as in attempting to divine the reality of a dangerously foggy world – has been a delicious, one-word oxymoron since the late 16th century. For most of that run, it was the work of the state, the church, or the occasional large enterprise.
The organizational mass of state-sponsored intelligence is beyond measure. In the United States alone, the Office of the Director of National Intelligence manages a roughly $100 billion budget, attempting to rationalize 18 formally-disclosed intelligence organizations. There are the known spy agencies, like the Central Intelligence Agency, Army Intelligence, and the FBI National Security Branch. There are also the known “unknowable” groups, like the National GeoSpatial Intelligence Agency and the National Reconnaissance Office, or NRO.
Satellites merely hint at the interplanetary scale of state-sponsored spying. Back in 2012, the National Reconnaissance Office, which has been managing a secret fleet of space-based observational platforms since the 1960s, announced it would flatly donate not one but two(!) then-state-of-the-art observational satellites to NASA.
Values, features, and budgets were never fully disclosed, as far as we could confirm. But back-of-the envelope, the NRO’s hand-me-down birds matched the features of the $16 billion Hubble Space Telescope.
The NRO’s roughly $32 billion giveaway was only the beginning of orbital intelligence capital over the years. Freedom of Information Request documents reveal that, starting all the way back in 1963, the technology the NRO used to peer down at the Soviets, was also used by NASA to gaze up at the Moon for possible lunar landing sites. Records indicate that NASA and the NRO regularly bickered over the use of these tools.
The 1960s U.S. Air Force invested major resources in the Manned Orbiting Laboratory as secret spy platform from space.
The space turf wars got so ugly that the Department of Defense secured its own funding for an observational intelligence platform called the Manned Orbiting Laboratory. Think today’s International Space Station, but for spying in utter secrecy from space.
An interesting side story emerges as a grim reminder of the sacrifice such secret space intelligence required. No less than Chuck Yeager helped choose the first African-American astronaut, a major named Dr. Robert H. Lawrence, to be on of the Manned Orbiting Lab crew. In spite of having thousands of hours of jet-pilot experience, Lawrence died while instructing another pilot in the high-speed landing techniques that the quick descents from the Orbiting Laboratory would require.
America’s first African-American astronaut, Dr. Robert H. Lawrence, pictured here in 1966, was chosen for the Orbiting Laboratory crew. Unlike NASA, Orbiting Lab pilots had a major hand in developing systems. This pioneering pilot/scientist was killed in 1967 while ejecting from a stricken F-104 Starfighter. He was training other pilots in the tricky landings the mission required.
To this day, when a reusable soaring spacecraft, like the retired Space Shuttle or the spiffy Virgin Galactic SpaceShip, touches down on earth, it was Lawrence and his secret team of elite pilot/scientists that made it all possible. Official recognition of Lawrence’s sacrifice did not come until the 1990’s. A formal tribute to this American hero had to wait until 2017.
Satellite intelligence once required a particularly gritty strain of the right stuff.
State Sponsored No More
Space surveillance remained an extension of the capital- and labor-intensive strategic intelligence complex until well into the 1980s. Through that period, the United States and the former Soviet Union maintained a strict diplomatic duopoly over satellite images, through clever arrangements like the Outer Space and Anti-Ballistic Missile treaties.
But in 1986, the French (of course) broke the super-power satellite stranglehold. It launched its SPOT system that offered better resolution, at lower prices, to the private market. Soviets immediately responded with yet higher resolution images and deeper discounts. The private-sector space imaging and intelligence race was off and running.
And like any good spy novel, the satellite intelligence story began to veer off in strange twists and turns.
Every Tinker and Tailor Now a Spy
Readily available satellite imagery has evolved to utterly belie Hollywood-style takes on spying from space. Glitzy real-time, high-resolution overhead imagery and data, as seen in movies like The Bourne Identity, does have applications. But overall, cheap and plentiful satellite data has taken intelligence into an entirely low-tech direction.
Readily available public satellite data sets, like this from Google Earth Engine, overwhelm any sort of casual analysis
Browsing of vast public satellite archives like Google’s Earth Engine Catalog rapidly deteriorates into a vertiginous, exhausting experience. The premium is immediately put on knowing enough about the realities on the ground to ask the right questions.
The value created by matching such truth on the ground, with realities gleaned from space, is startling. Take the 100% free YouTube channel called Reporting from Ukraine. Each day, “RfU” relays remarkably accurate battle front analysis to 177,000 official subscribers in English, Ukrainian, Russian, French and other languages.
The general approach, says a company spokesperson, is to gather fundamental facts such as reports from ministries of defense and public media channels; then study available overhead imagery and maps and match that spatial awareness to a deep understanding of joint military operations on the ground.
“With time, this approach proved to be effective,” was the spokesperson understatement of cosmic proportions.
The free YouTube channel Reporting from Ukraine matches deep on the ground knowledge of Ukraine, with available satellite images. It regularly outperforms CNN, SkyNews as well as official Pentagon sources.
Day in and day out, Reporting from Ukraine utterly outperforms enormous media outlets like The New York Times, CNN or Sky News. But it also offers far deeper battlefield analysis as provided by official military sources, like Pentagon spokesperson General Patrick S. Ryder and the White House’s Coordinator for Strategic Communications Admiral John Kirby.
Reporting from Ukraine is so accurate that one must consider the ramifications of the go-to source for information on critical events in central Europe, not being the American military, but a few smart people, working from heaven knows where.
Cheap Birds In Space
Intelligent capital is detecting fresh value in commercialized satellite intelligence. In December 2022, sector leader Maxar Technologies (MAXZR) announced it would be purchased by Advent International, a Boston-based private equity firm, for $6.4 billion. Several satellite analysis companies are also assets of material worth: Ursa Space Systems, Australia-based Geospatial Intelligence Pty, Seattle’s Black Sky (BKSY), and Abu Dhabi’s 4 Earth Intelligence top our list.
Within Planet Labs lies the classic small-cap operation, with all its attendant imperfections: It really is a $5.00 stock. There really are just 5 quarters of filings. There are just $821 million of total assets, $551 million of which is still melting away in cash. Net losses were $137 million last year.
The smoke of Planet Labs burning through the $42 million in cash flow it lost in 2022 could probably be seen from space.
Planet Labs technology can capture monthly crop output for a Nebraska farm.
But there is one critical fact that renders all that risk reasonable: Planet Labs boasts on its balance sheet $311 million in tangible satellites. But those millions don’t merely support a bird or two, as NASA used to have to. Planet Labs has a robust fleet of over 200 orbiting platforms.
The company makes a reasonable argument that it will soon have more than 400.
As of today, Planet Labs claims it observes in real time, more than 350 million square kilometers of the earth’s surface. Canada, the U.S. including Alaska, and China cover about 10 million square kilometers each. Co-founders, Will Marshall and Robbie Schingler, helped start the Small Spacecraft Office at NASA. Senior Vice President of Space Systems James Mason, helped develop a debris-remediation technology for orbiting vehicles. The company is adding customers like Microsoft, the German Federal Agency for Cartography, and the Brazil MAIS program at a clip of $2 million in sales per week.
Planet Labs fleet of over 200 low-cost satellites, pictured here, produce high quality images and data.
Planet Labs also has the capital to grow. It purchased climate change analysis shop Salo Sciences this past month. It was Planet’s fifth acquisition over the past several years.
Here’s the story we can piece together on Planet Labs: In any kind of tech-enamored boom market, this would be the space memestock of the month. Can anybody actually explain something like Ark Space Exploration and Innovations (ARKX)?
But in these newly uncertain times, here before us is a tangible but overlooked asset that’s orbiting above our heads, peering down as we speak.