Scottish Mortgage Sheds Tesla as SpaceX Exposure Becomes Double-Edged Sword

Scottish Mortgage Trust sells Tesla stake to focus on AI infrastructure, but its 25.7% SpaceX bet drags on performance amid valuation woes and looming lock-up expiry.

The Scottish Mortgage Investment Trust has quietly exited its long-standing Tesla position, redirecting capital toward the infrastructure that powers autonomous AI systems — but the move comes as its outsized SpaceX bet drags on performance. The trust’s shares slipped another 2.10 percent on July 27 to close at €15.38, extending a slide that has now erased 21.10 percent from the 52-week peak of €19.50 reached in late May.

The portfolio overhaul, outlined by fund manager Tom Slater and investment specialist Chloé Darling-Stewart, marks a decisive pivot toward what the team calls the “Agentic Era” — the physical and digital backbone required for autonomous artificial intelligence. Tesla, a mainstay for over a decade, has been fully liquidated. Management framed the sale as a reallocation toward AI-driven electricity demand and satellite-based connectivity, areas where they see faster growth trajectories.

That pivot has placed SpaceX front and center. Elon Musk’s space and AI venture now accounts for 25.7 percent of Scottish Mortgage’s portfolio, making it the trust’s single largest holding by a wide margin. But that concentration has become a source of acute anxiety. SpaceX shares have halved since mid-June, touching an all-time low of $107.34 on Tuesday — briefly dipping below the company’s initial public offering price. The sell-off reflects mounting valuation concerns and jitters ahead of two pivotal events: the company’s first quarterly earnings report as a public entity on August 4, and the expiration of a lock-up agreement on August 6 that could unleash roughly 911.5 million shares onto the market.

The contagion has been direct. Seeking Alpha estimates Scottish Mortgage has shed 14 percent in sympathy with SpaceX’s decline. The trust’s shares now trade 8.85 percent below their 50-day moving average of €16.88, while the 14-day relative strength index has fallen to 35.3 — a level that some market participants interpret as oversold, though the technical picture remains fragile.

Despite the turbulence, the trust retains a degree of resilience on longer time frames. Over the past twelve months, Scottish Mortgage has gained 22.11 percent, and it is up 12.75 percent year-to-date — comfortably outpacing the FTSE 100. That relative strength has led Seeking Alpha to maintain a “Hold” rating rather than downgrading to a sell, even as the near-term headwinds intensify.

One persistent challenge is the discount to net asset value. The trust currently trades at an 11 percent discount to its portfolio’s fair value, a gap that has proved stubborn despite an aggressive buyback campaign. On July 27, the board purchased 500,000 ordinary shares for treasury at 1,333.10 pence each, bringing the total held in treasury to 411,558,993. The buyback program is designed to narrow the discount and support the share price, but so far it has failed to close the gap. The secondary article pegged the discount at 8.8 percent, reflecting minor fluctuations in the underlying NAV calculation.

There have been small signs of insider confidence. A director purchased roughly £5,000 worth of Scottish Mortgage shares in early July — a modest transaction, but one that market watchers often interpret as a vote of faith during turbulent periods.

The coming fortnight will test that faith. SpaceX’s quarterly report on August 4 and the lock-up expiry two days later represent binary events for the trust’s largest holding. Analysts remain divided: Morgan Stanley and others maintain ambitious price targets for SpaceX despite the recent rout, while more cautious voices urge patience until the lock-up overhang clears. The options market has already priced in elevated volatility around these dates.

Scottish Mortgage paid a final dividend of 2.97 pence in July, but the trust remains squarely focused on capital appreciation rather than income. Management has consistently urged investors to evaluate the strategy over five- to ten-year cycles. The portfolio is being reshaped away from past winners toward what the team believes will be the next generation of market leaders — but for now, the market is pricing in considerable uncertainty around the largest of those bets.