Scottish Mortgage's SpaceX Stake Swells to $4bn, But Lock-Ups and Rotation Trigger a 5% Sell-Off

Scottish Mortgage Investment Trust sees shares drop 5.29% as investors sell to buy SpaceX directly. Lock-up period prevents immediate gains, while board seeks to raise private investment cap to 30%.

Elon Musk’s SpaceX made history on Friday with the biggest initial public offering ever, rocketing to a valuation north of $2 trillion on day one. For Scottish Mortgage Investment Trust, a longstanding backer of the space company, the event ought to have been a moment of glory. Instead, the trust’s own shares took a beating, sliding 5.29% to close at €16.12 – a drop that widened the seven-day loss to 5.70% and pushed the stock 17.31% below its May high.

The paradox reflects a powerful rotation underway: investors are pulling money out of the diversified trust to buy SpaceX directly. The exodus hit other space-related names even harder, with Rocket Lab and AST SpaceMobile both suffering double-digit declines. BlackRock alone had placed a $5 billion order for SpaceX shares, underscoring the magnetic pull of the new listing.

A Blockbuster That Comes with a Wait

Scottish Mortgage first bought into SpaceX in 2018 under portfolio manager Tom Slater, who held firm despite market scepticism. That paper is now worth more than $4 billion and represented 21% of the trust's net assets as of early June. But the trust cannot monetise that gain overnight. A staggered lock-up period ties Scottish Mortgage's hands for up to 180 days, a constraint Slater had warned about, noting that the SpaceX stake could "double or halve" in the near term.

The lock-up, combined with the so-called "sell-the-fact" reaction, has kept Scottish Mortgage's stock under pressure. Friday's tumble pulled the shares below their 50-day moving average, though the trust still shows a year-to-date advance of roughly 16%.

Balancing the Books and Breaching the Cap

While SpaceX's public debut reshapes the trust's portfolio, management is juggling two other pressing issues. First, the revaluation of the SpaceX holding will be folded into Scottish Mortgage's net asset value starting next week. Analysts also expect Nasdaq to fast-track SpaceX into the Nasdaq-100 index within 15 days, which would trigger fresh buying from index funds.

Second, the board is preparing for a contentious shareholder vote on 2 July 2026. It is seeking approval to deploy an additional £250 million into private companies, even if that pushes non-listed investments beyond the current 30% ceiling. The proposal marks a significant escalation of the trust's appetite for illiquid assets, a strategy that has already prompted a multi-year buyback campaign – over the past two years, Scottish Mortgage has repurchased more than £3 billion of its own shares in an effort to narrow its persistent discount to net asset value.

The Cost Behind the Constellation

SpaceX's spectacular valuation rests on a business that is still burning cash. In its latest quarter, the company posted a net loss of $4.27 billion on revenue of $4.69 billion, with much of the red ink tied to its xAI artificial-intelligence project. Starlink, the satellite internet division, remains the financial workhorse, generating around 60% of total revenue last year. The IPO has turned a once-opaque private holding into a volatile public asset, and Scottish Mortgage's shareholders are now learning the price of that liquidity – a lesson that may also shape the outcome of next year's pivotal vote.