Scottish Mortgage (SMT) share price ripe for a breakout as a new catalyst emerges
Scottish Mortgage share price popped this week, reaching its highest level since November 5. SMT jumped to a high of 1,140p, up by 11% from its lowest level in November and by 46% from its lowest point in November last year.
Scottish Mortgage share price is soaring amid SpaceX IPO news
SMT is a large British fund that invests in private and publicly traded companies from around the world. Most of its portfolio companies are from the United States, with other big names being from China and Europe.
The biggest companies in its portfolio are companies like SpaceX, TSMC, Mercadolibre, Amazon, Bytedance, Meta Platforms, Nvidia, ASML, Shopify, and Stripe.
SMT stock price jumped this week after a report by Bloomberg said that SpaceX was planning an IPO that would see it raise over $30 billion at a valuation of about $1.5 trillion. Elon Musk responded to the report by saying that it was largely accurate.
The SpaceX IPO will be the biggest one after Saudi Aramco’s, which raised $29 billion in 2019. It will be a major win for Scottish Mortgage as the company is the biggest component of its portfolio with an 8.2% stake.
The IPO will enable SMT to realize an investment it made a few years ago when the company was valued at less than $100 billion. Most importantly, it will enable it to sell some of the shares it currently holds.
Most importantly, there is a likelihood that SpaceX’s valuation will continue soaring after it goes public despite its pricey valuation. A good example of this is Tesla, an automaker that spots one of the biggest premiums.
Data compiled by Seeking Alpha shows that the company has a forward price-to-earnings (P/E) ratio of 347 and a trailing multiple of 269. It also has a PEG ratio of 8.30, much higher than its five-year average of 4.94.
Top SMT portfolio companies are doing well
The Scottish Mortgage share price is doing well because it has stakes in key companies that are disrupting the tech world. It has large stakes in TSMC, Nvidia, and ASML, which are essential in the ongoing AI boom.
Nvidia makes the most advanced GPUs, while TSMC manufactures chips for the biggest companies in the industry. ASML is the only company that makes the large equipment used by semiconductor companies.
Scottish Mortgage also has huge stakes in companies like Amazon, Cloudflare, and Databricks that are big names in the cloud computing industry.
Additionally, it invested in Bytedance, a company that owns TikTok, the fastest-growing social media company in the world. Like SpaceX, analysts believe that a Bytedance IPO, if it ever happens, will be a big one as the company is now valued at over $480 billion.
SMT share price technical analysis
The daily timeframe chart reveals that the Scottish Mortgage share price has bounced back in the past few days. It jumped from a low of 1,016p in November to the current 1,140p.
It is about to flip the Supertrend indicator from red to green. Also, the stock has moved above all moving averages, a sign that bulls are in control for now.
Top oscillators like the Relative Strength Index (RSI) and the MACD have all pointed upwards. Therefore, the most likely scenario is where the stock continues rising as bulls target the key resistance level at 1,176p. A move above that level will invalidate the double-top pattern and point to more gains.
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