Scottish Mortgage, a growth-oriented investment trust, has confirmed that the price of its SpaceX holding is lower than the company's purported IPO price
Scottish Mortgage has confirmed that the value of its stake in SpaceX, a space exploration start-up, is lower than what the company is reportedly aiming for at its impending initial public offering (IPO). If SpaceX meets the reported price tag, that might result in an increase in Scottish Mortgages' value at the time of the listing, but experts warn that initial public offerings (IPOs) can be erratic and unpredictable times.
One of the most well-known investment trusts in the UK, Scottish Mortgage (LON:SMT), is run by Baillie Gifford and makes investments in cutting-edge businesses that it believes have the potential to grow over the long run.
As of April 30, Scottish Mortgages' largest holding, which makes up 18% of the portfolio, is SpaceX, a significant player in the rapidly expanding space economy.
BFIA problems nowadays. "Scottish Mortgage first invested in SpaceX in December 2018, deploying capital through August 2021 with a total investment of 151 million (approximately £200 million at the time of purchase)," Scottish Mortgage manager Tom Slater stated. Slater affirmed that "SpaceX has been the trust's largest contributor to returns over one, three, and five years, and the fifthlargest contributor over ten years," even though no more money has been invested since then.
Current Videos From IMG Since SpaceX is a privately held company, its shares do not fluctuate on a daily basis like those of a publicly traded company. This indicates that its value varies sporadically during certain liquidity events, such as insiders selling shares on private markets, rather than continuously.
Reports state that SpaceX may aim for a valuation of up to £1.75 trillion when it lists later this year. The market anticipates that the company may soon be worth this much, even though this valuation hasn't yet materialized and might not, depending on what happens when it lists.
This presents a dilemma for investment trusts and funds that own its shares. What is their estimated value at a potential IPO, or what was their level at the company's most recent liquidity event?
Scottish Mortgage discloses the value of SpaceX.
In response to this query, Scottish Mortgage clarified in a briefing note dated May 12 that, as of March 31, 2026, the trust values its SpaceX holding at £1.25 trillion. This comes after "a revaluation during the first quarter as secondary market transactions were rebased to reflect the merged valuation of SpaceX and xAI." Elon Musk founded both SpaceX and xAI.
Additionally, the trust made it clear that its assessments of SpaceX and other private companies it owns are based on "verifiable transactions rather than market commentary or press speculation" and are made by SandP Global, an independent third-party provider, and the Baillie Giffords valuations team.
Since its original investment, SpaceX has given Scottish Mortgage outstanding returns, even at this valuation.
Slater stated, "As of March 31, 2026, the holding was valued at 2.98 billion (approximately £3.94 billion), representing an increase of around 19 times the original investment."
However, could Scottish Mortgage shareholders expect a value boost when SpaceX lists, considering the rumored IPO valuation is 40% higher than the trust is currently marking them?
What effects might a SpaceX IPO have on Scottish Mortgage?
The potential effects of a SpaceX IPO on investment trust are difficult to predict. For starters, Scottish Mortgage stated in the briefing note that it is currently unclear what limitations might be in place for current shareholders after they are listed. They might be subject to a lock-up period, which is a set time frame following a company's initial public offering (IPO) that typically lasts between 90 and 180 days and prohibits major pre-existing shareholders from trading their shares.
Ben Johnson, a senior analyst at investment manager Charles Stanley, stated, "The Scottish Mortgage management team may not be able to take profits initially, even if SpaceX shares jump to the rumored IPO valuation level." "The team has communicated this clearly and has come to terms with it. The "
Additionally, future gains may already be priced in by the market. Scottish Mortgage trades at a premium of about 3.5 percent to its net asset value (NAV), whereas the typical UK investment trust trades at a discount of about 12 percent.
According to Chris Beauchamp, chief UK market analyst at investing platform IG, this likely reflects general optimism over the trusts strategy, which heavily favors growth and tech stocks. However, it may also partially reflect the market's expectation that its SpaceX holding may soon rise in value.
However, Beauchamp also warned that any tech IPO has the potential to cause volatility.
Beauchamp stated, "It's a different world once you're a public company," largely due to heightened scrutiny of business principles.
Following their initial public offerings (IPOs), companies such as Musk's own Tesla and Meta (formerly Facebook) experienced share price declines.
"The risk with IPOs is that people who have already invested in the company are looking for an exit," Beauchamp stated. "It makes sense that they want to realize how much wealth is involved. This may result in an intense desire to sell.
Johnson stated, "During and following the IPO, investors should anticipate significant volatility in the Scottish Mortgage share price." "The trust has never placed so much emphasis on a single name. However, he pointed out that Tesla was the last business in which the trust had a high double-digit weighting, "which proved to be one of its most successful ever investments" in the long run.
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