Analysts at investment bank Jefferies have done the hard yards in scouring Scottish Mortgage Investment Trust PLC (LSE:SMT)’s annual report published this week to assess the often murky world of private company valuations.
Private investments are a cornerstone of Scottish Mortgage’s investment philosophy, but they often prove controversial for their lack of transparency.
Unlike listed stocks, private companies are valued sporadically, typically when a major funding round takes place.
Jefferies used Scottish Mortgage’s proportional ownership stakes in the trust's largest private investments to back out their implied carrying valuations while assessing whether they increased or decreased in value.
The conclusions, on a year-on-year basis to 31 March, were as such:
- SpaceX valuation increased 68% to $241.4 billion
- ByteDance valuation flat at $206.6 billion
- Stripe valuation increased 60% to $66 billion
- Northvolt valuation decreased 7% $10.5 billion
- Tempus valuation increased 13% to $6.2 billion
- Zipline valuation increased 10% to $4.2 billion
- The Brandtech Group valuation increased 15% to $3.1 billion
The average valuation shift across Scottish Mortgage’s private portfolio was 9% to the upside; considerably below the 34% increase in the Nasdaq composite in the same period.
Broker Stifel called this a “drag on performance” in the last financial year.
Jefferies noted the significant increase in the valuation of Elon Musk’s SpaceX, which rose to $241.4 billion.
However, the valuation might be slightly overstated due to the rounding of the disclosed ownership stake.
Northvolt's valuation remained relatively stable at around $10.5 billion, still representing a discount to its potential IPO valuation of $20 billion.
The valuation of ByteDance showed fluctuations, increasing to $248 billion in November 2023 before settling back to $206.6 billion by the year-end.
Jefferies attributed this to the geopolitical backdrop and potential impacts of TikTok being banned in the US.
The Brandtech Group's valuation was reduced to $3.1 billion, reflecting a discount from its previous funding round valuation.
Unlisted investments account for more than a quarter of Scottish Mortgage’s entire asset portfolio (as of 31 March).