Scottish Mortgage Capitalises on Premium Demand as SpaceX IPO Nears

Scottish Mortgage Investment Trust issues two tranches of treasury shares above NAV, signaling strong investor demand driven by its 21% SpaceX stake ahead of the company's blockbuster IPO.

The Scottish Mortgage Investment Trust has been busier than usual in the market, issuing two tranches of shares from its treasury stock within a matter of days — and at prices above net asset value, a clear signal of sustained investor appetite. The first block of 2.35 million shares was placed on 1 June at 1,516.50 pence, followed by a second tranche of 3.85 million at 1,545.42 pence the next day. After both transactions, roughly 1.12 billion shares are in circulation, with a further 369 million still held in the treasury buffer.

The premiums on both placings are no accident. Under trust rules, treasury shares can only be issued when the market price exceeds NAV; otherwise existing holders would be diluted. That the shares commanded a premium underscores that investors are currently valuing the trust above the sum of its underlying assets. The fresh capital is now available for deployment into new positions, the details of which will be revealed in the next portfolio update.

What is driving that enthusiasm? In large part, the trust’s heavyweight bet on SpaceX. The world’s largest private space company accounts for 21% of Scottish Mortgage’s portfolio — a stake worth some £3.5 billion. Baillie Gifford, the trust’s manager, has marked up SpaceX’s valuation three times in the past six months alone, most recently to around $1.6 trillion. The eagerly awaited IPO, set for 12 June, targets $135 per share, which would value the Elon Musk?led company at $1.78 trillion — a record for any public offering.

That concentration has delivered powerful momentum. The trust’s market value has climbed 42% since December, largely on the back of SpaceX’s re?ratings. Yet Co?Manager Tom Slater has acknowledged the flipside: a single position of this size amplifies the risk if the SpaceX narrative sours. Analysts also point out that the targeted IPO price assumes a massive ramp in the company’s AI?related revenues through 2050 — a long?term wager the market may or may not endorse.

The share price, meanwhile, tells a more tempered story. At Friday’s close of €17.10, the stock was down 5% on the week and roughly 12% below its May record high of €19.50. That still leaves a year?to?date gain of around 23%, and the relative strength index at 47.4 points to neutral conditions. With the IPO just days away, the market will soon deliver its verdict on whether the SpaceX valuation can be swallowed whole — and whether Scottish Mortgage’s concentrated bet stands as a stroke of genius or a risk too far.