Scottish Mortgage Trust share price has retreated sharply this week, continuing a downward trend that started on June 3. SMT stock has slumped to 1,357p, its lowest level since April 14, and 13% below its highest level this year. This retreat has coincided with the ongoing SpaceX sell-off that has erased billions of dollars in value.
Scottish Mortgage shares dive amid the ongoing SpaceX retreat
SMT share price has plunged in the past few days as SpaceX continued its retreat. After peaking at $225.50 last week, its stock has plunged to $156, with its market capitalization falling from $2.66 trillion to $2 trillion today.
SpaceX stock has dropped after its IPO for a few reasons, including profit-taking among investors, its $60 billion buyout of Cursor, valuation concerns, and the recently announced $25 billion bond sale.
It is common for newly listed companies to go parabolic in the first few days and then retreat once the hype fades. This is a similar situation to what happened with top companies like Circle Internet, Bullish, and Meta Platforms.
The ongoing SPCX stock retreat has impacted Scottish Mortgage stock, as we predicted here. That’s because it is highly exposed to the company, which makes up 17.1% of its total holdings. SMT stock surged before the IPO and is now falling as it loses momentum.
It is unclear how long the SpaceX stock price crash will last, but as we saw with Circle, it can last for a long time. Circle Internet initially jumped to $300 in June last year and then dropped gradually, eventually bottoming at $50 on February 5. Its attempts to rebound found strong resistance at $136, where it formed a double-top pattern.
Therefore, SpaceX may remain under pressure for a while. The next potential driver for the shares will be its financial results, which will come in the next few months and shed more light on its business.
As such, Scottish Mortgage stock may remain under pressure in the coming months as the SPCX stock retreats.
Other SMT portfolio companies are struggling
SpaceX is not the only Scottish Mortgage company that is struggling this month. For example, Meta Platforms dropped to $562 on Tuesday, down sharply from last year’s high of $795.
Similarly, Nvidia stock has dropped by over 15% from its highest point this year. Also, Amazon has dropped to $234 from the year-to-date high of $278, while Mercadolibre has plunged by 40% from its highest level last year. Other firms like Shopify, Cloudflare, Spotify, Ferrari, PDD Holdings, and Affirm have retreated from their peak.
The next main catalyst for the Scottish Mortgage stock price is the upcoming Anthropic IPO, which will value it at over $1 trillion. Anthropic recently raised funds at a $900 billion valuation, three months after raising at a $300 billion valuation.
Scottish Mortgage share price technical analysis
SMT stock chart | Source: TradingView
The daily chart shows that the SMT stock price has slumped in the past few days, moving from a high of 1,565p to a low of 1,357p today. It has formed a head-and-shoulders-like pattern, a common bearish reversal pattern.
Top oscillators like the Relative Strength Index (RSI) and the MACD indicators have continued their downward trend. The RSI moved below the neutral level of 50, while the two lines of the MACD have crossed the zero line.
Therefore, the stock will likely continue falling, potentially to the key support level of 1,000p.
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