Scottish Mortgage Investment Trust (SMT) has lost momentum in the past few days as investors wait for earnings of its top companies. It dropped to 1,538p on Tuesday, down by 6.8% from its highest point this year. This sell-off will be in the spotlight as investors assess the value of Anthropic, one of its top holdings.
Scottish Mortgage Trust to react to SpaceX earnings
One of the top catalysts for the SMT stock price is the upcoming SpaceX earnings report that comes out on Tuesday. Wall Street analysts are optimistic that the company’s business continued doing well in the third quarter.
Yahoo Finance data shows that the average estimate is that its revenue jumped to $13 billion in the third quarter from $7.8 billion in Q2. This growth will be driven by its artificial intelligence (AI) business, which has received orders worth billions of dollars from companies like Google and Anthropic.
The results come at a time when SpaceX stock has dropped by over 35% from its all-time high. Most recently, the shares dropped after reports that the company was raising $40 billion to fund its AI business.
The numbers also come at a time when it is focusing on becoming a major player in the telecom industry in the US. It recently reportedly spent over $8 billion buying spectrum, which it hopes to use to disrupt companies like AT&T and Verizon.
READ MORE: SpaceX earnings: AI revenue, financing needs and Tesla merger talks in focus
Anthropic valuation cut
Scottish Mortgage Investment Trust has a large stake in Anthropic, the creator of Claude. Its last disclosures showed that its value in the company stood at over $500 million.
The challenge, however, is that there are signs that the company’s growth trajectory is slowing. Recent reports showed that its revenue jumped to $16 billion in the third quarter, while the company turned profitable during the quarter.
The risk, however, is that its revenue growth was lower than expected and the company is ramping up its spending. For example, it is said to be considering placing another big order from Nscale, weeks after it placed a similar $45 billion order.
As a result, investors are recommending that it slash its IPO valuation from $2 trillion to about $1.5 trillion. Such a move would affect Scottish Mortgage, which has a stake in the company.
Top corporate earnings
Scottish Mortgage stock will also react to earnings by some of the biggest holdings. Meta Platforms, which it has a $305 million stake in, will publish its results on Wednesday, providing more color about its advertising and AI businesses. Amazon, another Magnificent Sevencompany, will release its numbers next week. Other top portfolio companies that will release their earnings in the near term are Cloudflare, Shopify, Spotify, and Tempus AI.
What next for the Scottish Mortgage share price?
Scottish Mortgage stock chart | Source: TradingView
The daily chart shows that SMT stock has been in an upward trend in the past few months, a move that coincided with the recovery of most of its portfolio companies. It jumped from a low of 1,300p in July to a high of 1,654p.
The stock crossed the important resistance level of 1,560p, its highest point on June 2nd this year. It has now dropped and retested that support level, confirming a break-and-retest pattern.
On the positive side, the stock has settled above the 50-day moving average and the Major S/R pivot point of the Murrey Math Lines tool. Therefore, the stock will likely bounce back, potentially to 1,654p, its highest point this month. A rebound above that level will point to more gains towards 1,750p.
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