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Scottish Mortgage (LSE: SMT) shares have had a brilliant run, climbing almost 85% in three years. Performance has been driven by the US tech stock boom in general, and one holding in particular: Space Exploration Technologies Corporation, or SpaceX (NASDAQ: SPCX).
The FTSE 100 investment trust took a stake in Elon Musk’s privately-owned venture in 2018, and added to it on several occasions. So when SpaceX floated on 12 June, the Scottish Mortgage share price was already rising in anticipation.
When SpaceX stock jumped from $135 to $211, Scottish Mortgage jumped too. SpaceX accounts for 25.7% of the trust’s total assets under management, as of 30 June.
Why is this FTSE 100 stock in retreat?
This also meant that when SpaceX fell, and today (27 July) it’s at $115, Scottish Mortgage was going to take a hit too. Its shares have slumped just over 12% since peaking at 1,509p on 6 July. Is this a buying opportunity?
SpaceX IPO excitement was so intense that a bout of post-launch share price volatility was almost inevitable. SpaceX investors have had a bumpy ride, its shares have crashed 50% peak to trough. Scottish Mortgage isn’t all about Musk. It holds 101 stocks in total, split roughly between publicly limited and unlisted private companies.
Some 6.4% of the trust’s total assets are held in chipmaker TSMC, while Nvidia (5%), ByteDance (4.2%) and Amazon (3.2%) complete the top five holdings. Investors have soured on US tech, and not just due to SpaceX aftershocks. They’re concerned about the potential AI bubble.
The latest intensification in the Iran war is another concern, as that’s driven the oil price back to $100 a barrel, threatening an inflationary shock. That would hit growth stocks by driving up their borrowing costs and reducing the real value of future earnings. For the record, crude has retreated to $90, as combatant missile stocks run low.
Is this the right time to buy?
Deciding to buy could go either way. If Donald Trump strikes some kind of peace deal with Iran, or simply hints at one, the tech and SpaceX sell-off could quickly reverse.
At The Twelfth Magpie, we believe timing short-term market movements in this way is impossible. Ultimately, it’s the long-term that matters. Investment basics like diversification need to be taken into account. Many of us now have super-sized exposure to US tech, following years of blistering performance. Do we really need more?
Scottish Mortgage is certainly cheaper than it was. It now trades on a discount of 10.9% to its underlying net asset value. That’s below the 12-month average of 6.7%. Yet I’m concerned that SpaceX may prove a bit of an albatross, given the trust’s large stake. The interstellar explorer posted a $5bn loss last year, followed by another $4bn in the first quarter of 2026, as it pours money into its xAI operation. The shares need to settle and find their true market value. It could be lower than today.
Brave investors might still consider drip-feeding money into Scottish Mortgage, to take advantage of that dip and discount. As an investor, I’m just going to hold what I have.
Should you invest £5,000 in Scottish Mortgage Investment Trust Plc right now?
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Harvey Jones owns shares in Scottish Mortgage.
This story originally appeared on Motley Fool
