Buy SpaceX Stock Before It Soars 435% to $10 Trillion, According to 1 Wall Street Analyst

Space Exploration Technologies (NASDAQ: SPCX), aka SpaceX, has quickly become one of the most noteworthy stocks to hit the market in some time. The rocket launch, satellite communications, and artificial intelligence (AI) company saw insatiable demand ahead of its public debut. Despite raising $85.7 billion, the offering was more than four times oversubscribed, according to reports. Put another way, demand was more than four times the available shares.

It's easy to understand why. Investors are looking to get in on the ground floor of a once-in-a-generation company and ride the stock to new heights. After creating reusable rockets, SpaceX has plans to launch data centers into space, which could potentially be a game changer.

One Wall Street analyst called SpaceX "one of the defining industrial infrastructure companies of the 21st century," with more than 400% potential upside, which would push its market cap to more than $10 trillion. Let's take a look to see if he's right.

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Raymond James says SpaceX is a buy

Raymond James analyst Brian Gesuale initiated coverage on the stock with a strong buy rating and a Street-high price target of $800. That represents potential gains of 435% for investors compared to Tuesday's closing price.

The analyst believes the commercialization of space travel, combined with the vast potential of AI, is driving "the most significant infrastructure convergence since the advent of the Internet."

The linchpin of Gesuale's bullish thesis is the potential for Starship -- the company's next-generation spacecraft -- to democratize the transport of cargo into orbit. He calculates that Starship will reduce the cost of transporting goods into space by 99%, while increasing payloads "by an order of magnitude."

The analyst draws parallels to other phases of the industrial revolution, including electricity, railroads, and the internet. Starship will be the catalyst that transforms SpaceX "into a transportation network defined by commercial aviation-like operating cadence and continuously declining unit costs."

Gesuale highlights what he calls SpaceX's "powerful infrastructure flywheel," pointing out that its original rocket -- Falcon -- funded its Starlink internet satellite constellation, Starlink is funding the development of Starship, and "Starship enables the next generation of platforms."

The analyst crunched the numbers and estimates SpaceX's revenue will grow from $38.5 billion to $837 billion, a nearly 22-fold increase, while earnings before interest, taxes, depreciation, and amortization (EBITDA) will soar more than 39 times from $17.7 billion to $696 billion.

Is the analyst right?

The analyst's thesis is sound, in theory -- but there's a catch. This flywheel he references only works if SpaceX successfully develops a completely reusable Starship -- and that's a big "if." The heavy rocket is still in development, recently completing its 12th test flight, and there's no "official" timeline for completion.

The other wildcard is the ability to successfully deploy data centers in space. Some experts have highlighted the massive engineering hurdles ahead, including orbital data center design, chips hardened against radiation, and lasers powerful enough to beam the data back to Earth. Failure to achieve any of these critical designs could scuttle SpaceX's future success.

Don't take my word for it. Citi analyst John Godyn has a buy rating and a $200 price target, but has outlined a scenario in which the stock could reach $900. However, that goal is only possible if SpaceX can demonstrate "key engineering milestones" at scale.

If you think nothing can go wrong, I refer you to Tesla's repeated delays in delivering its unsupervised full self-driving capability. CEO Elon Musk originally predicted full autonomy by 2018, with 1 million robotaxis on the road by mid-2025 -- and investors are still waiting.

Don't get me wrong: The potential is certainly there -- and I wouldn't bet against Musk -- but the reality is complicated. It will take plenty of things going right for the analyst's thesis to play out, and only one thing going wrong to scuttle it.

It's also worth noting that with trailing-12-month revenue of $19.3 billion, SpaceX is selling at 102 times sales and roughly 42 times expected 2026 sales. That's a pricey valuation for a company that still faces significant hurdles.

Citigroup is an advertising partner of Motley Fool Money. Danny Vena, CPA has positions in Tesla. The Motley Fool has positions in and recommends Tesla. The Motley Fool has a disclosure policy.