Scottish Mortgage's SpaceX Triumph Narrows NAV Discount, But Rate Jitters and AGM Vote Loom

SpaceX IPO boosts Scottish Mortgage's portfolio value, but rate fears and a 5% sell-off loom ahead of a July 2 vote to permanently lift the unlisted holdings cap.

The Scottish Mortgage Investment Trust is caught between two powerful forces. The long-awaited SpaceX IPO has dramatically reshaped its portfolio valuation, yet a sharp sell-off sparked by renewed rate fears has left shares nursing a 5% loss over the past seven trading sessions. The stage is set for a pivotal annual general meeting on 2 July.

SpaceX went public on 12 June at an issue price of $135 and closed its first day at $160.95, a 19% gain. The resulting market capitalisation of $2.1 trillion represents the largest listing in history. For Scottish Mortgage, the payoff has been extraordinary: an initial $200 million investment spread across 2018 to 2021 is now worth roughly $5 billion, making SpaceX more than 20% of the entire portfolio.

The transition of such a large private holding into a publicly traded equity has transformed how the market values the trust itself. Historically, Scottish Mortgage traded at a wide discount to net asset value, reflecting investor scepticism about the unlisted holdings. That discount has now shrunk to just 2.27%, well below the twelve-month average of 6.94%. The public price discovery for SpaceX has bolstered confidence in the remaining private assets — when the largest position is quoted daily, a central argument against the trust falls away.

The picture is not entirely rosy. SpaceX’s connectivity arm Starlink generated $11.4 billion in 2025 revenue, accounting for 61% of group sales, yet the company still posted a net loss of roughly $4.9 billion. And the IPO appears to have sucked capital from the broader space sector: rivals such as Rocket Lab and Planet Labs suffered double-digit declines in the aftermath.

Rate fears compounded the pressure. A strong US jobs report pushed up the implied probability of a Federal Reserve rate increase in December 2026, a headwind for any portfolio heavy on unlisted growth companies. Scottish Mortgage’s relative strength index has dropped to 37.5, nearing oversold territory, and the stock has fallen more than 17% from its 52-week high of €19.50 reached in late May. Shares were trading at €16.12 before a modest bounce on Monday, when they rose 3.1% to €16.62. The RSI now sits at 44, neutral ground.

The vote on 2 July may prove the defining event. Shareholders in Edinburgh will decide whether to permanently lift the cap on unlisted holdings from the previous 30% limit. The problem is that the limit is already breached: private investments currently represent 41.4% of the portfolio, with SpaceX alone at 21%. In April the board secured temporary relief allowing additional investments of up to £250 million above the 30% threshold. Now it wants a permanent solution.

Also on the agenda is a new buyback authority for up to 14.99% of shares, but only at prices below net asset value. That policy is already being enforced. On 8 June the trust bought back 800,000 shares at 1,436.86 pence, nearly 40 pence below the NAV of 1,475.91 pence. The shift in capital allocation has been swift: just days earlier, on 1 June, Scottish Mortgage placed 2.35 million shares from treasury at 1,516.50 pence, followed by another 3.85 million at 1,545.42 pence.

The dividend remains a steady signal. A final payment of 2.97 pence per share brings the annual total to 4.57 pence, a 4.3% increase and the 43rd consecutive year of growth. And while retail investors have been selling, institutions are moving in. Mitsubishi UFJ Asset Management built a stake of more than 3% in early June, acquiring over 33.6 million shares.

The trust’s long-term record remains compelling. In the financial year to March 2026, NAV advanced 27.4% and the share price delivered a total return of 26.8%. Over ten years, NAV has compounded at 435.2%, nearly double the FTSE All-World’s 233.9%. The next potential catalyst is the expected inclusion of SpaceX in major equity indices, which would force passive fund buying and structurally support the trust’s largest holding.

The AGM will determine whether management gets the flexibility it seeks to pursue its growth strategy — or whether shareholders decide to rein in a portfolio increasingly dominated by unlisted giants.