Planet Labs PBC (NYSE: PL) saw its shares plummet 12.42% in after-hours trading on Monday, reversing earlier gains, after the Earth imaging company announced plans to offer $300 million in convertible senior notes. The sharp reversal came despite Planet Labs reporting better-than-expected second quarter results and raising its full-year guidance earlier in the day.

Planet Labs' stock had surged over 35% during regular trading hours after reporting Q2 revenue of $73.4 million, up 20% year-over-year and well above analyst estimates of $65.74 million. The company also narrowed its adjusted loss to $0.03 per share, beating expectations for a $0.04 per share loss. Additionally, Planet Labs raised its fiscal 2026 revenue outlook to a range of $281-$289 million, up from previous guidance of $265-$280 million.

However, the after-hours announcement of the proposed $300 million convertible senior notes offering appeared to spark investor concerns about potential shareholder dilution. The notes, due in 2030, may be converted into shares of Planet's Class A common stock. While the company plans to use capped call transactions to mitigate potential dilution, the large size of the offering relative to Planet Labs' market capitalization likely fueled the sharp sell-off. The company intends to use the net proceeds for general corporate purposes, with final terms to be set at pricing.