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Scottish Mortgage (LSE: SMT) shares have enjoyed increased attention lately following news of a potential SpaceX IPO. But the move isn’t guaranteed to be clean or immediate.
The trust has a huge stake in Elon Musk’s space exploration company, and if the market accepts a much richer IPO valuation, it could boost net asset value.
But looking more closely at the numbers, it might not be as smooth sailing as some expect.
Why this matters now
Scottish Mortgage sold a massive 1.7m treasury shares on 18 May, which shows how much the IPO is influencing the trust. It also currently values its SpaceX holding at $1.25trn, and says that stake was 19.3% of total assets as at 31 March.
The latest market chatter suggests SpaceX could list on Nasdaq under the ticker SPCX as early as 12 June. With talk of a $1.75trn valuation, it would be the biggest IPO in history.
So the first question is simple: will the IPO price prove the trust has been too cautious, or too optimistic?
Why SpaceX shares could tank
SpaceX has finally revealed its financials ahead of the IPO, and the numbers aren’t pretty.
According to reports, the group lost $4.94bn in 2025 on revenue of $18.67bn, while Q1 2026 brought losses of $4.3bn on sales of $4.7bn.
Starlink remains its key breadwinner, with $11.38bn of revenue in 2025. But the wider business is still being dragged down by huge spending, especially around data centre infrastructure for xAI.
So it’s important that investors approach this as a classic ‘growth-at-all-costs’ story:
- Strong revenue growth, but huge cash burn.
- Starlink makes money, yet other divisions still lose heavily.
- AI and space infrastructure could be winners later, but they’re expensive now.
And that leads to the awkward question: what happens if the market decides the dream is too expensive?
Pros and cons for Scottish Mortgage
For Scottish Mortgage, the positives are obvious. A successful IPO at $1.75trn would increase the value of a holding already worth $1.25trn, boosting the trust’s overall net asset value (NAV).
But the downside is also obvious. It’s already a tech-heavy trust with a lot of concentration in the US. That means any disruption to the US tech market could lead to a sharp share price drop.
Fortunately, this risk is mitigated somewhat by more diverse names such as TSMC, ASML, Ferrari and MercadoLibre. But investors must still rely on the fund’s managers to make good decisions on portfolio allocation.
Here’s a simple trade-off of pros vs cons:
| Pros | Cons |
|---|---|
| Higher SpaceX valuation could boost NAV | Losses could spook public markets |
| IPO may unlock value for shareholders | Volatility could hit the share price sharply |
| Existing diversified holdings soften the blow | Heavy tech exposure still leaves risk |
Final thoughts
The SpaceX IPO is likely to be one of the biggest stock market events in history, yet it could go either way.
But since Scottish Mortgage is highly diversified, I’m sure it’ll survive any outcome. Still, investors considering the stock should do so with the understanding of potential short-term volatility if things go wrong.
It’s worth noting that over the past 10 years, the share price is up 496.6%, equivalent to a compound average growth rate (CAGR) of 19.7%.
If it can keep up that record, the next decade could be highly lucrative.
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Mark Hartley owns shares in Scottish Mortgage Investment Fund.
