Scottish Mortgage (LSE: SMT) shares enjoyed a decent rally last week after Elon Musk spoke of a planned $1.75trn IPO for SpaceX. The private space exploration company reportedly makes up 19.3% of the trust’s total assets.
The valuation is also far above the company’s current $800bn valuation, suggesting a potential 119% windfall if the IPO is successful.
Why SpaceX matters
SpaceX has recently partnered with NASA to help progress its Artemis programme, focused on putting astronauts back on the Moon. Initial launches have already occured, with NASA awarding SpaceX major work on the wider lunar mission architecture. This underlines how embedded the company has become in future space exploration.
For Scottish Mortgage investors, the key question is simple: if SpaceX does float, could the trust be sitting on one of the biggest value-creation events in its history?
On paper, the answer is yes. A successful listing at a much higher valuation could give the trust a meaningful boost, especially because SpaceX is already such a large part of the portfolio.
But before we get ahead of ourselves, let’s take a closer look at the trust.
What Scottish Mortgage does
Despite the name, Scottish Mortgage has nothing to do with property or home loans. It’s a long-term growth trust focused on disruptive innovation, emerging technology, and private companies with big future potential. It aims to back businesses early and hold them for years, not trade in and out of them.
That approach has built a very broad portfolio. Alongside SpaceX, the trust holds global names such as TSMC, Ferrari, ByteDance, Meituan and PDD Holdings. That gives it exposure across sectors and regions, from semiconductors and luxury cars to Chinese consumer platforms and private tech.
The numbers
Scottish Mortgage’s latest half-year results were impressive, with revenue of £2.68bn, net income of £2.66bn, and net debt of £1.52bn. Plus, it has a low price-to-earnings (P/E) ratio of just 3.87. That said, trust valuations can look unusual because they are heavily influenced by investment gains and private holdings rather than steady trading profits.
The more important point is performance. In the six months to 30 September 2025, net asset value (NAV) per share rose 22.9%, ahead of the FTSE All-World Index. Over 10 years, the shares are up 413%, equating to annualised returns of 17.76%.
So even without the potential SpaceX boon, it seems to be on to a good thing.
But prior perfromance is no guarantee of future results, and this is still a high-volatility trust. Even with global diversification, it remains heavily exposed to US tech. That means it can rise quickly in strong markets, but fall just as fast when sentiment turns.
Higher rates, trade tensions, geopolitical risk, and sharp moves in big growth stocks can all hit returns.
The bottom line
If SpaceX lists successfully and investors like the valuation, Scottish Mortgage could enjoy a powerful rally this year. As a shareholder, I’m monitoring the situation closely – if things go as planned, I’ll enthusiastically top up my position through the year.
For those seeking moderate tech exposure with less direct risk, I think it’s an exciting stock that’s worth considering. Just bear in mind, this is not your usual smooth-sailing investment trust.
Sounds risky? I’ve recently covered a number of top-quality defensive shares that can help smooth out volatility.
