You would be forgiven for wondering what American businessman Elon Musk has to do with the FTSE 100. His largest company Tesla is listed across the pond and has little interaction with any of the businesses listed in London. His social media company, X, is private and so is not listed on any stock exchange anywhere.
Nevertheless, there is a FTSE 100 stock that has been booming in recent years on the back of the success of Musk’s space exploration firm SpaceX. And Scottish Mortgage Investment Trust (LSE: SMT) could be about to receive another huge plus from the billionaire later this year…
Exciting stuff
So what’s the story here? Basically, Scottish Mortgage is an investment trust composed of shares in many exciting high-tech enterprises. The most interesting one, in my view, being SpaceX, which is currently unavailable on the public market. SpaceX’s success has pushed Scottish Mortgage shares up by 60% in the last year. It now makes up a fifth of the overall portfolio.
Here’s where it gets interesting. SpaceX is set to IPO later this year with a reported valuation of $1.75trn. That could make it the biggest initial public offering in history. What’s more, any increase in the share price could send Scottish Mortgage shares into orbit.
It’s worth saying at this point that while Musk is CEO and figurehead, there are over 15,000 other employees too. These are some of the best and brightest minds working on the new space age. And it’s fair to say they’re doing a pretty good job.
How good? Well, no one sends more into space when measured by payload. And that’s not compared to any other company or even any other country – that’s everyone. Here’s an even better stat: SpaxeX has sent more mass to orbit than anyone else in the entire history of space launches!
Eye-watering
What are the risks? Well, this is a nascent industry. No one is making tons of money from this kind of endeavour just yet. And much of the money that comes into the firm is from government contracts.
In 2025, SpaceX is reported to have made $8bn in earnings and $16bn in revenues. Comparing those figures to the potential $1.75trn valuation, we get a price-to-earnings ratio of 218 and a price-to-sales ratio of 109. Those are eye-watering figures that would be practically uninvestable in a more mature business.
Likewise, investing in Scottish Mortgage is not just about one company. The firm invests in other exciting companies such as Ferrari, Amazon, and TikTok-owner ByteDance. SpaceX could have an all-timer of an IPO this year and Scottish Mortgage could still struggle if the rest of its portfolio does.
Overall? I’d not like my entire portfolio to invest in high-risk growth companies like SpaceX, but I think they’re certainly worth mulling over for a small part of a balanced portfolio. For that reason, I think Scottish Mortgage shares are worth considering.
