How a 1,900% Gain in SpaceX Forced Scottish Mortgage to Flip the Script on Share Buybacks

After years of buybacks to combat a discount, Scottish Mortgage now issues new shares at a 6.5% premium, fueled by a 1,900% surge in its SpaceX holding, now 19.3% of the portfolio.

For years, Scottish Mortgage Investment Trust waged a losing battle against a stubborn discount to net asset value, pouring as much as £1bn into buybacks that barely narrowed the gap. That strategy has been thrown into reverse. With the stock now trading at a 6.5% premium, the trust has begun issuing new shares for the first time in nearly five years — a direct consequence of a spectacular performance by its largest private holding, SpaceX.

The turnaround is almost entirely powered by the rocket maker. Scottish Mortgage first invested a three-digit million sum in Elon Musk’s company in 2018, and that stake has since swollen to an estimated £3bn — a gain of 1,900%. SpaceX alone now accounts for 19.3% of the trust’s total portfolio, its internal valuation pegged at a staggering $1.25 trillion. The soaring valuation has pushed Scottish Mortgage’s shares to a 52-week high of 17.93 euros, lifting the year-to-date return to just under 29% and bringing the stock within 2% of its all-time high of 1,528p set in November 2021.

The renewed issuance, which began daily at the end of April from the trust’s treasury, dilutes existing shareholders only when the stock price sits above the NAV — a condition comfortably met. As of May 20, the reported NAV stood at 1,394.81p, with the estimated diluted figure for the week ending May 22 at 1,408.29p. The shares have climbed from a trough of 621p in 2023, when the buyback program was at its height, to their current elevated level, where demand now outstrips supply. The question hanging over the market is whether the steady drip of new shares will compress the premium enough to cool buying pressure.

Scottish Mortgage’s rebound, however, is not a one-name story. Its publicly listed holdings have also contributed significantly. At the end of the first quarter, the top five positions were TSMC (5.72%), MercadoLibre (3.99%), Amazon (3.56%), ASML (3.22%), and Nvidia (3.17%). The manager, Baillie Gifford, has also been actively adjusting the portfolio, adding 2.5 million shares of Axon Enterprise in the same period. The trust remains the largest global equity investment trust in the UK by some margin, with a market capitalisation of roughly £16.2bn and total assets of £16.7bn.

The next major catalyst could come from SpaceX itself. Market reports point to a potential initial public offering as early as June 2026, which would trigger a standard 180-day lock-up period for early investors. Until that window closes, Scottish Mortgage offers private investors one of the few direct ways to ride the space company’s trajectory. The trust’s heavy tilt toward unlisted tech differentiates it sharply from peers such as the Manchester and London Investment Trust, which has pivoted heavily toward AI infrastructure, with three-quarters of its top holdings now in that segment.

For now, the trust is enjoying a rare moment of equilibrium — its premium is wide enough to justify issuance, yet the underlying assets continue to attract buyers. Whether that balance holds will depend on how quickly the new shares absorb demand and whether SpaceX’s eventual IPO lives up to the astronomical expectations baked into the current price.