What happened

Virgin Galactic Holdings (NYSE:SPCE) rocketed 6.5% higher yesterday on news that NASA has awarded it one of two small contracts to assist on payload "flight and integration" services. This is good news, to be sure, for a company that has now gone two straight quarters without booking a single penny in revenue -- but already, Virgin Galactic stock is losing altitude.

As of 1:20 p.m. EST Wednesday, Virgin Galactic stock is down 3.5% -- and you can blame investment advisory firm Strategic Wealth Partners for that.

Cartoon characters confused by stock chart arrow falling and crashing into floor

Image source: Getty Images.

So what

This morning, you see, CNBC reported that Strategic Wealth Partners is extremely skeptical of Virgin Galactic stock's 60%-plus rise since early November. According to SWP president Mark Tepper, the stock's rise is not justified by fundamentals. Rather, Virgin Galactic is "a pure speculation, pure hype stock," and one with a potential market size less than half what investors say it is.  

"All the bulls [are] throwing in everyone that has a net worth of $5 million-plus and there's 2.4 million of those people globally [but] I think the TAM [total addressable market] is really only those people with a net worth of $10 million and above," Tepper told CNBC. "So now the TAM goes from 2.4 million people down to 1 million. That changes everything."

Now what

To an extent, Tepper has a point, but my concern here is more that the analyst may be contradicting himself.

On the one hand, yes, with Virgin Galactic stock trading at a recent valuation of $6.4 billion, but pegged to produce no more than $1 million in revenue (much less profits) this year, the stock's 6,400-times-sales valuation is clearly divorced from reality. And yet, pointing out that a stock is vastly overpriced is not quite the same thing as saying it is "pure speculation" or "pure hype" -- emphases added.

Even Tepper admits that Virgin Galactic has 1 million potential customers to whom it can market its $250,000 space tourism tickets. Even if nothing else changes (prices don't go down, and the market size doesn't go up), that's a $250 billion total addressable market, and right now, Virgin Galactic is the odds-on favorite to be the first space company to begin selling tickets into that market.

Long story short, Virgin Galactic stock may not be worth $6.4 billion, but investors can take some comfort in knowing it is worth something.