What happened

Shares of Rocket Lab USA (RKLB 6.00%) fell 12.9% in October, according to data provided by S&P Global Market Intelligence, but the stock was down as much as 24% for the month, prior to a late-month rally.

The stock is still up 40% since the beginning of September as investors try to make sense of what this space start-up is worth.

So what

Rocket Lab only went public in late August, joining the Nasdaq via a deal with a special purpose acquisition company (SPAC), and its shares have gone on a wild ride in the short time since. The company is one of a number of space SPACs that have captured the imagination of investors, but the excitement has arguably gotten ahead of the results.

A rocket blasts off into space.

Image source: Getty Images.

Rocket Lab arguably has the best business among any of the space start-ups that have hit public markets. It focuses in on the small satellite launch market, which is ripe for growth. The company is also putting some of the funds it raised via the SPAC deal to work on acquisitions, trying to round out its offering and become a one-stop shop for companies seeking to launch a satellite into space.

But in September at its peak, Rocket Lab was valued by the market at nearly $10 billion, a hefty sum for a company that has generated just $55 million in revenue over the past 12 months. Such stocks tend to be volatile, and in October, the shares came somewhat down to Earth after their previous rally.

Now what

Rocket Lab is scheduled to release third-quarter results on Nov. 15, at which time, investors will get a chance to further assess the business and perhaps take a fresh look at valuation. But make no mistake: This stock is liable to remain volatile for some time.

This is an intriguing business but a risky one and will take time to play out. I believe Rocket Lab has the right stuff to grow into its valuation and expand on it over time, but liftoffs tend to be turbulent. Investors need to buckle in and be prepared for a long ride.