What SpaceX CEO Elon Musk needs to do to launch the stock into the stratosphere

SpaceX must pull off rocket reusability if the company is to reach a stratospheric market valuation in the not-too-distant future.

"A successful investment case in SpaceX at the current $2 trillion enterprise value rests almost entirely on a single admittedly massive engineering bottleneck: Starship reusability (i.e. 20-50 flights per Starship with relatively inexpensive and quick refurbishment/redeployment)," Pivotal Research Group analyst Jeffrey Wlodarczak wrote in a note on Tuesday. "If Elon Musk can solve for this fundamental issue it potentially drives down the cost of launches to space to the equivalent of terrestrial freight opening up an unarguably massive opportunity."

Wlodarczak initiated coverage of SpaceX with a Buy rating and $220 price target.

That massive opportunity, Wlodarczak said, includes Starlink taking a material share of the wireless industry and serving as a space monopoly, with others having to pay SpaceX for entry.

"In the end, investors are debating xAI, Colossus, and Starlink take-rates," Wlodarczak added. "Those matter only after Starship works. Our $220 target is a call on reuse 20–50 flights per vehicle, cheap refurb, fast turnaround. If that is solved, the rest of the model can happen. If it is not, SPCX is a different and much smaller company."

SpaceX stock continues to trade off its post-IPO lows as the trade has largely stabilized.