SpaceX Could Be A ‘Different And Much Smaller Company’ If Starship Reusability Falls Short, Analyst Warns

• The brokerage initiated coverage of SpaceX with a ‘Buy’ rating and a $220 price target, implying about 47% upside from current levels.
• The firm also highlighted SpaceX’s potential in defense deals, space manufacturing, Earth observation and point-to-point passenger travel.
• Failure to achieve reusability targets could leave SpaceX a ‘different and much smaller company,’ Pivotal added.

SpaceX (SPCX) was in focus on Tuesday, after Pivotal Research said the company’s roughly $2 trillion valuation rests heavily on solving one major Starship challenge: making it reusable enough to fly dozens of times with minimal, low-cost refurbishment.

The brokerage initiated coverage of SpaceX with a ‘Buy’ rating and a $220 price target, implying about 47% upside from current levels.

SPCX shares were up 1% in pre-market trading.

Starship Reusability Holds The Key

Pivotal said its investment thesis depends on SpaceX making Starship reusable, according to Investing.com. The firm believes the reusability will depend on whether each Starship vehicle can fly 20 to 50 times and require relatively cheap, quick refurbishment between launches. The firm called this a “single admittedly massive engineering bottleneck.”

If SpaceX solves it, Pivotal sees opportunities spanning Starlink’s potential to capture a share of the current $1.7 trillion terrestrial and wireless market, orbital AI data centers, defense deals, space manufacturing, Earth observation and point-to-point passenger travel.

However, failure to achieve that level of reusability would leave SpaceX a “different and much smaller company,” the analyst warned.

Other Wall Street firms have highlighted the same challenge. Bernstein recently estimated SpaceX could generate about $600 billion in revenue by 2031, assuming roughly 3,500 Starship launches. This is still a conservative forecast compared to the company’s own target of $1 trillion in annual revenue by 2030. 

Wolfe Research even went beyond the reusability thesis, adding that SpaceX needs to build enough launch infrastructure to fly its rockets at scale.

SpaceX’s $100B Bet For Increased Starship Launches

Last month, SpaceX announced plans to invest about $100 billion in what it says will be the world’s largest launch facility in Louisiana. Construction is expected to begin in 2027, with the first launch targeted for 2029.

CEO Elon Musk has said the site could eventually have more than a dozen launch towers and support over 30 Starship flights per day.

Separately, SpaceX is expected to launch a Falcon 9 rocket for the USSF-153 mission, a classified mission for the United States Space Force, from the Vandenberg Space Force Base in California on September 10.  

Retail Sees Resistance At $150

Retail sentiment surrounding SPCX on Stocktwits remained in the ‘bearish’ territory over the past 24 hours.

One bullish user highlighted SpaceX’s ownership data.

Another user saw key resistance at $150.

The stock has gained nearly 11% over its IPO price of $135.

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