What happened

September was a difficult month for not-yet-profitable, growth-focused companies, with investors fleeing for safer, more conservative options. There are few pursuits more risky than traveling to space, so perhaps it is no surprise that Rocket Lab USA (RKLB -0.01%) shares lost 26% of their value in September, according to data provided by S&P Global Market Intelligence.

So what

Rocket Lab is a space stock focused on launching small- to medium-sized satellites into orbit. The company isn't as well known as some of the other space start-ups, but it has accomplished quite a bit in a short amount of time. Rocket Lab has delivered 150 satellites to orbit through 30 missions, generating $128 million in sales over the past 12 months. But it is also still in the money-losing stage, reporting negative EBITDA of nearly $120 million during the same period.

Though Rocket Lab shows great potential, it is also far from a sure thing. In September, a month in which the S&P 500 fell by more than 9% as investors increasingly worried about the risk of a recession, more speculative stocks had trouble getting airborne. Rocket Lab was caught up in that pressure.

The stock also took a hit following a mid-month filing disclosing that executive vice president Shaun O'Donnell sold 200,000 shares, raising more than $1 million. There appears to be nothing controversial about the sale, but in a market where investors are already on edge, insider sales tend to cause added panic.

Now what

When Rocket Lab went public in August 2021 via a special purpose acquisition company (SPAC) deal, company management outlined a plan to be a low-cost leader in the small-satellite launch market. It also intended to move upstream via the development of a larger rocket and add satellite manufacturing and monitoring services to become a one-stop shop for corporate clients who want exposure to space. In the year-plus since, Rocket Lab has made progress in all elements of its plan.

The stock, however, is now down 57% since Rocket Lab's debut.

Although the company's prospects haven't changed much in the last year, broader market sentiment, and tolerance for risk, has. The potential of the space market is both intriguing and uncertain, and Rocket Lab is one of a number of companies attempting to defy the laws of physics and make rocket launches as routine as a quick drive to the convenience store.

For long-term-focused investors with a tolerance for risk, Rocket Lab is perhaps the best stock to own among the numerous space-related companies that have come public in the past few years. But as the market has shown, this investment is still speculative at best. Rocket Lab has great upside potential, but the stock is best suited as a small part of a well-diversified portfolio.