Planet Labs PBC (NYSE: PL) shares tumbled 13.25% in pre-market trading on Tuesday, following the Earth imaging company's announcement of a proposed $300 million convertible senior notes offering. The sharp reversal came despite Planet Labs reporting better-than-expected second quarter results and raising its full-year guidance the previous day.

On Monday, Planet Labs saw its stock surge 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 due in 2030 appeared to spark investor concerns about potential shareholder dilution. 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. This volatile trading underscores the market's mixed reaction to Planet Labs' financial moves, as investors weigh the company's strong growth prospects against the potential impact of the capital raise on existing shareholders.