Scottish Mortgage's SpaceX Triumph Underwhelms as Rate Fears and Lock-Up Constraints Take Hold

SpaceX IPO delivered fleeting gains for Scottish Mortgage Trust, which suffered a 5.7% weekly loss due to 'sell the fact' trade, lock-up provisions, and macro headwinds from rate hike fears.

The long-awaited SpaceX IPO was supposed to be Scottish Mortgage Investment Trust’s crowning moment. Instead, the historic listing left shareholders nursing a weekly loss of 5.70 percent, with the shares closing at €16.12. Elon Musk’s space venture debuted on Nasdaq at $135 per share, valuing the company at a staggering $1.77 trillion – a record for any IPO. By the end of the week, the rally had pushed the market capitalisation above $2 trillion. Yet for Scottish Mortgage, the gain was fleeting: the trust’s stock added 3.6 percent on listing day, barely enough to offset the drag from broader headwinds.

Investors appeared to be engaging in a classic “sell the fact” trade, compounded by the trust’s inability to immediately monetise its SpaceX stake. Co-manager Tom Slater had cautioned about volatility, and the reality is that Scottish Mortgage remains locked into its shares for up to 180 days under staggered lock-up provisions. The precise terms for pre-IPO investors are still unclear, undermining any short-term liquidity advantage. The original £151 million investment has ballooned to roughly £3 billion, representing about one-fifth of the entire portfolio. But for now, that paper wealth is largely untouchable.

Macro pressures added to the gloom. A robust US jobs report pushed the probability of a Federal Reserve rate hike in December 2026 above 80 percent, hitting growth-oriented portfolios hard. Scottish Mortgage, with over 40 percent of its assets in unlisted private companies, is especially sensitive to rising rates. The trust’s private market exposure has already exceeded its stated 30 percent cap, driven primarily by the SpaceX holding. That sets the stage for a pivotal vote at the annual general meeting on 2 July, where shareholders will be asked to authorise an additional £250 million in private investments even if the cap is breached.

Adding a mechanical drag, the trust’s ex-dividend date fell on 11 June – one day before the SpaceX listing. Scottish Mortgage has increased its payout for 43 consecutive years, and the final dividend for the year to March 2026 will rise 4.3 percent to 2.97 pence per share, payable on 10 July, subject to shareholder approval. The total distribution of £49.6 million, however, outstrips net profit of £25.6 million, meaning the dividend is not fully covered by earnings. That uncovered payout could become a point of contention as the trust pursues aggressive private-market bets.

Beyond SpaceX, the portfolio holds another potential catalyst. Anthropic, the developer of the Claude chatbot, confidentially filed for an IPO on 1 June. Scottish Mortgage’s stake of roughly £400 million, worth about 2.6 percent of assets, was valued at $965 billion in the company’s Series H round in May. OpenAI is also preparing to go public. Meanwhile, the trust has been buying back its own shares aggressively, spending more than £3 billion over the past two years in an effort to narrow the discount to net asset value.

The relative strength index has fallen to 37.5, approaching oversold territory, and the stock remains up 16.09 percent year to date despite the weekly setback. But with private equity deal volumes down 70 percent from late 2025, software valuations under pressure, and the AGM looming, Scottish Mortgage is navigating a delicate balancing act between unlocking value from its unlisted champions and managing the risks that come with them.