Scottish Mortgage Trust: top winners and losers revealed

The Scottish Mortgage Investment Trust (SMT) share price has done relatively well this year, helped by the ongoing recovery of technology companies. It has risen by over 8%, outperforming the FTSE 100 and FTSE 250 indices. 

The stock has, nonetheless, underperformed the blue-chip technology ETFs like the Invesco QQQ and the Technology Select Sector Fund (XLK), which have all soared to a record high this year.

Top SMT laggards

The Scottish Mortgage Trust’s performance is reflective of the challenges that most companies in its portfolio are going through. 

A good example of this is PDD Holdings, the parent company of Temu and Pinduoduo. Its stock plummeted last month after the company’s financial results showed that it was going through major challenges. 

It has dropped by over 41% from its highest point this year, erasing over $45 billion in value. As I have warned before, Temu is PDD Holdings’ biggest risk because of the difficulty of making a profit in the segment.

In the past, companies like Wish.com went viral for offering cheap Chinese items but they struggled to turn a profit. As a result, Wish, which was once valued at over $1 billion, was sold for a bargain price.

PDD Holding’s performance is also because of the ongoing slowdown in China as evidenced by other e-commerce companies like JD.com and Alibaba.

Scottish Mortgage stock has also retreated because of Nvidia, its biggest holding. While the company has surged this year, it has recently lost momentum and moved into a correction, falling by over 15% from the YTD high.

Nvidia’s shares continued falling even after the company published strong financial results. Its revenue rose by 110% in the last quarter to over $30 billion. It also hinted that revenue would jump to over $32 billion in the third quarter.

On the positive side, Nvidia shares have formed an inverse head and shoulders pattern, meaning that it may bounce back soon. 

Meanwhile, Tesla stock price has moved into a bear market, falling by over 20% from its highest point this year and by almost 50% from the all-time high. Tesla’s performance is mostly because the EV industry has gotten highly competitive, pushing it to slash prices, which has affected its margins.

Most of Tesla’s competition is coming from Chinese companies like BYD, Li Auto, Nio, and Xpeng, which have gained market share in the biggest market.

The other big headache for Scottish Mortgage is Kering, the parent company of companies of Gucci, Saint Laurent, Balenciaga, and Bottega Veneta. Its stock has dropped in the last seven weeks and is down by over 64% from the highest point in 2021 as its growth slowed.

SMT’s top winners

On the positive side, some companies in the Scottish Mortgage portfolio have done well. SpaceX, the giant company owned by Elon Musk, was recently selected by NASA to bring two astronauts home from the International Space Station (ISS). The company’s Starlink solution has continued to gain market share globally. 

Therefore, there is a likelihood that SpaceX’s valuation will continue growing. In the most recent fundraising, its valuation jumped to over $210 billion, making it one of Scottish Mortgage’s biggest winners. The challenge is that SpaceX is still private, making it difficult for the fund to exit the trade.

Amazon is another top company in Scottish Mortgage’s portfolio as its stock has surged by over 119% from its lowest point in 2023. The company is benefiting from the tailwinds of cloud computing and artificial intelligence (AI). 

Ferrari is another big winner in the Scottish Mortgage portfolio as the stock has jumped in the last five consecutive weeks, moving to a record high of $500. It has jumped by about 300% from its lowest point in 2020.

Ferrari has benefited by focusing on its Internal Combustion Engine (ICE) vehicles, which have continued to do well this year. It has also attracted demand because of its recently launched models like 12 Cilindri, SF90 Stradale, Spider, and Roma. 

Meta Platforms, the parent company of WhatsApp, Instagram, and Facebook, has also been a big winner this year as its stock jumped to a record high of $543, up by over 510% from its lowest point in 2022. The other top winners this year are Shopify, TSMC, Stripe, and ASML. 

Scottish Mortgage share price analysis

On the weekly chart, we see that the SMT stock price has done well in the past few months as it jumped from a low of 602p in 2023 to over 945p. The stock has formed a cup and handle chart pattern, a popular bullish sign. It has also moved slightly above the 50-week and 100-week Exponential Moving Averages (EMA).

Therefore, the stock will likely have a bullish breakout as buyers target the next key resistance point at 944.4p. This view will be confirmed if the stock rises above the upper side of the cup at 944p.