SpaceX (SPCX  ) carries a roughly $2 trillion valuation on the promise that its rockets can be flown and reused like commercial airliners. Pivotal Research Group is betting that the promise will be fulfilled. The firm initiated coverage on SpaceX with a Buy rating and a $220 price target in a Tuesday note from analyst Jeffrey Wlodarczak.

The bullish call comes with a major caveat: nearly the entire investment thesis hinges on a single unresolved engineering challenge.

"A successful investment case in SpaceX at the current ~$2 trillion EV rests almost entirely on a single admittedly massive engineering bottleneck," Wlodarczak wrote, per CNBC. "Starship reusability (i.e. 20-50 flights per Starship with relatively inexpensive and quick refurbishment/redeployment)."

In other words, SpaceX's next leg of growth - and the valuation Pivotal Research is underwriting - depends on the company proving it can fly the same Starship vehicle dozens of times with fast, cheap turnarounds between launches.

A Binary Outcome for the Stock

Wlodarczak was blunt about how binary the outcome could be for the stock.

"Our $220 target is a call on reuse 20-50 flights per vehicle, cheap refurb, fast turnaround," he said. "If that is solved, the rest of the model can happen. If it is not, SPCX is a different and much smaller company."

That framing puts Starship's reusability economics at the center of the bull case. If SpaceX can crack the reuse problem, Wlodarczak's model suggests launch costs could fall toward levels competitive with terrestrial freight, unlocking a far larger addressable market for the company.

If it can't, the current $2 trillion enterprise value looks stretched relative to a company Wlodarczak says would be "different and much smaller."

How Pivotal's Target Stacks Up

Pivotal Research's $220 target lands slightly below the broader Street consensus. The average analyst price target for SpaceX currently sits near $226, according to Benzinga data, suggesting Wlodarczak's call is bullish but not the most aggressive on the Street.

The initiation also arrives just ahead of a notable overhang: roughly 319 million SpaceX shares are set to become unlocked on Wednesday, a potential source of near-term share supply that investors will be watching closely alongside the Starship reuse narrative.

SPCX Price Action: SpaceX shares were up 0.34% at $148.45 at the time of publication on Tuesday, according to Benzinga Pro data.