SpaceX upended wireless stocks after buying low-band wireless spectrum.

Investors freaked out, sending AT&T, Verizon Communications, and T-Mobile US shares sharply lower on Friday. Wall Street analysts, however, seemed unbothered, pointing out that physical limitations still constrain SpaceX's space-based broadband network.

Analyst reports detailing signal strength, area coverage, and the square of frequency followed SpaceX's spectrum purchase. Designing a modern network is clearly hard, but SpaceX knows that too, which is why investors shouldn't assume Elon Musk's rocket and AI company has finished laying the foundation for its wireless communications business.

First, SpaceX needs more spectrum -- essentially the pipes that carry wireless data. That's according to T-Mobile. Its Chief Technology Officer John Saw pointed out that SpaceX has accumulated roughly 80 megahertz of spectrum. T-Mobile has roughly five times what SpaceX controls.

Next, it needs terrestrial infrastructure to ensure adequate coverage, especially indoors. That's good for wireless tower companies, according to Raymond James analyst Ric Prentiss and others. Tower companies are like the apartment buildings for wireless, housing communications equipment owned by AT&T, Verizon, and T-Mobile. SpaceX represents a potential new tenant. Prentiss also noted that DISH has unused equipment that SpaceX could be eyeing.

Third, it might need a partner. Several analysts have speculated that SpaceX could pursue a mobile virtual network operator (MVNO) agreement. MVNOs offer cell service without owning infrastructure, which they rent from existing players such as Verizon or AT&T. It's a way for SpaceX to get needed infrastructure without building it all.

Of course, the traditional industry might want to keep SpaceX out, but if whoever agrees to talk with SpaceX could be a relative winner. Wells Fargo analyst Steven Cahall recently wrote that Verizon has the most to lose if SpaceX uses someone else and the most to gain from a SpaceX MVNO relationship. Verizon's subscriber base is relatively more at risk from competition from a new MVNO, he says, adding that a partnership could reduce Verizon's need to buy more spectrum.

SpaceX also needs Starship, its huge fully reusable rocket. That ship dramatically lowers the cost of reaching orbit. Starship is also needed to deliver more capable version three, or V3, Starlink satellites, which have more capacity than older models.

Starship is still in development. SpaceX hopes to be fully operational and carrying commercial payloads in 2027.

SpaceX still has work left to do to challenge traditional mobile wireless players. Investors should probably assume the company will make the effort.

SpaceX stock was down 0.3% in premarket trading Tuesday at $163, while S&P 500 futures were down 0.1%. Dow Jones Industrial Average futures were up 0.1%.